The banking sector has been experiencing several changes in the recent past, specifically in the context of digitalization and online banking. One of the latest additions on this front is the usage of virtual cards. A report by Juniper Research in 2019 stated that the business use of the cards is expected to grow by 90% through the next few years, and usage will pass $1 trillion by the year 2022. The COVID 19 outbreak may further propel this. Why is this happening, though?
What are virtual cards?
A virtual card is simply a mode of payment via a card information system without having to go through the hassle of managing and swiping an actual card. For any person, it is like generating a card number online and going forward with using it for any online transaction.
As you can imagine, it is a great alternative to the traditional credit cards, which are projected to become obsolete in the next 5 years, without compromising on the speed and the ease of doing the transactions.
Virtual Cards for Business
While virtual cards are a great service for individuals as well, it is the businesses that can benefit from it in more ways than one. In fact, virtual cards can completely transform how businesses make or receive payments. According to research by Accenture, virtual card payments in the US alone were estimated at $169 billion in 2018, out of which 1/3rd came from large businesses, slated to grow to $355 billion by 2022. In fact, even globally, the same report states that as many as 25% of Fortune 100 companies are now using virtual cards.
Here are a few reasons why more and more businesses are opting for virtual cards and how that is changing the transaction game for them:
- Anti-fraud measures
As opposed to standard credit cards or cheques, a virtual card is a more secure and flexible option for payments by a business. Virtual cards come with several customization options, and they cannot be stolen or be lost as ordinary cards can. You can change the number of transactions when the card can do even a single transaction, making sure no employee can misuse it.
Further, even if the merchant site is hacked and information is stolen, they will only get their hands just a bunch of random numbers, which will anyway change with the next transaction.
The chances of fraud via virtual cards are bleak, positioning the tool as a compelling alternative to businesses.
- Ease in accounting
Virtual cards also pack in extensive transaction data, all available to the businesses with the click of a button. So, there is no longer a major requirement for receipts or bills to be filed with the accounts departments by each employee making any payment, as they can control it all virtually. This is even more useful in the wake of the COVID-19 outbreak, where most employees are working remotely, and all transactions are now online.
- Use of approval to have more control overspending
Since virtual cards come with extensive customization options, it’s possible for supervisors and managers to set up granular approvals for payments made through the employees’ virtual cards. Businesses can better monitor the expenditure, including the when and how, and also control budgets. This can be especially advantageous for small businesses with limited resources.
- Making bulk transactions easier for the employees
In many businesses, bulk transactions of different kinds of payments take place on an everyday basis. A good example would be a food delivery service like Uber Eats. Virtual cards prove to be a reliable, quicker, and simpler way to make such payments than any other mode. It can also be beneficial for businesses working with several freelancers or contractors as opposed to regular salaried employees.
- Employee benefit scheme
Virtual cards can also be handy as an effective and quick way to deliver employee benefits, especially in times where employees may be working remotely. They are a cost-effective solution for the business and offer employees more autonomy as to its usage, as opposed to other forms of coupons, etc., a business might give to them as incentives.
Virtual Cards for Business: The Advantages are Obvious
It’s fairly obvious why businesses are increasingly opting for virtual cards. Cost-effectiveness, ease of usage, and the dozens of customization options are some of the most compelling USPs. However, just like a conventional credit card does require some research on several aspects – customer service, ease of use, etc. before being picked, it is essential to choose a virtual card from a reliable organization for similar reasons. Click here and join the waitlist for Salt, and promise yourself seamless banking services, including virtual cards of course, with just a click.