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Virtual cards, what are their benefits for business?

The use of payment cards in the corporate segment is developing rapidly. They are needed for mutual settlements with employees and transactions between customers and suppliers. Issuing companies see a growing demand for payment cards, so they seek to invest in developing this segment to offer customers new solutions that simplify their work and life. The latest innovation in payments is virtual cards. They help simplify a company’s payment management process and enhance the convenience of mobile applications and online portals. Thanks to their use, it can reduce a company’s operating costs.

Virtual cards offer various advantages, but companies must learn to implement this technology in their business processes. The main reason for this is fear of change. In most cases, the finance department assumes that virtual cards are technically challenging to implement. It is a misconception. In reality, the cost of using this solution is minimal, while the value gain a company receives will be tremendous.

What is a virtual card?

A virtual card is the same means of payment as a debit or credit card but without the physical plastic carrier. Functionally this type of card does not differ from physical ones but provides a lot of additional advantages for the user:

  • virtual cards can be issued and re-issued indefinitely;
  • they do not take up any space in a user’s wallet;
  • they can never be lost or stolen;
  • they are easy to manage and quick to reprogram.

The features of virtual cards give companies that use them limitless flexibility in changing their purchasing power to achieve new and new business goals.

A European virtual card issuer can issue a virtual card for each transaction; unlike physical cards, virtual cards can be disposable. Each new virtual card has its number but is attached to the same user account. It simplifies accounting and makes it more transparent to the user.

The main advantage of virtual disposable cards for businesses is a significant reduction in the risk of fraud. Each new card has its data, so even if an attacker intercepts it, they won’t be able to use it for further payments. 

Advanced issuers can create cards for a specific transaction, meaning they specify the exact amount to be paid, the merchant, and even a tiny date range in which it should be used. If any parameters are not satisfied, the payment is not authorized. These unique abilities of the virtual card reliably protect the user from fraudulent actions and, at the same time, do not affect the user in any way.

The virtual card has a unique VCN number that makes it easy to track transactions and reconcile payments with receivables. This ability makes it possible to make suppliers’ work more efficient.\

How to use virtual card from mobile phone?

Using a virtual card from your mobile phone is generally a simple process that involves the following steps:

  1. Install the virtual card app: The first step is to download and install the virtual card app on your mobile phone. This app is usually provided by your bank or financial institution.
  2. Sign up for an account: Once you have installed the app, you will need to sign up for an account by providing your personal and financial information.
  3. Activate the virtual card: After signing up for an account, you will need to activate your virtual card. This process may involve verifying your identity and linking the virtual card to a funding source, such as a bank account or credit card.
  4. Use the virtual card: Once your virtual card is activated, you can start using it to make purchases online or in-store by entering the card number, expiration date, and security code at checkout. Some virtual card apps may also allow you to use your phone’s camera to scan a QR code at the point of sale.
  5. Monitor and manage your account: It’s important to regularly check your virtual card account to ensure that all transactions are legitimate and to track your spending. You can usually do this through the virtual card app or by logging into your account online.

Keep in mind that the specific steps for using a virtual card may vary depending on the app and financial institution you are using. It’s a good idea to familiarize yourself with the specific instructions provided by your bank or financial institution before attempting to use your virtual card.

Features of Virtual Cards in the B2B Segment

Virtual cards are precious for companies working in the B2B segment. The consumer version of cards was introduced in the market, but due to the lack of opportunities to use them to pay for goods in stores and withdraw cash, they lost their popularity and are no longer in demand.

B2B payments rarely involve physical contact between the parties involved in the transaction. In the corporate environment, the personal presence of any party is very rarely necessary, so virtual cards are more popular and relevant to the business sector.

Risks of using virtual cards

Despite the many business benefits of virtual cards, many companies are still in a rush to implement them in their operations. The fact is that updating financial processes is a long-term goal, and large companies approach it with enough deliberation to calculate and take into account all the risks.

Of particular concern is the implementation of a new solution. Many companies are worried that, at this time, there will be downtime in internal payment systems, which can cause irreparable damage to the company. To avoid this, it is necessary to use modern platforms based on open APL to launch a virtual card project. They are developed by companies specializing in digital payments. Using such unique software makes it possible to integrate digital payments into an existing business model quickly and easily without reducing the performance of existing systems.

Many companies cite high exchange fees for receiving payments from such cards as one of the reasons why they have yet to introduce virtual cards into their financial operations. According to them, the commission may be as high as 2.5% of each transaction. It is essential to understand that compared to the benefits a company receives from virtual cards, the amount of these commissions is negligible. Virtual cards improve the efficiency of payment processes and increase the company’s cash flow through instant settlement.

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