Virtual card rebates: How they can save your business money

Virtual cards are becoming increasingly popular for businesses of all sizes. They offer a secure and convenient way to make payments to suppliers, but did you know they can also help you save money on payment processing costs?

How virtual card rebates work

Virtual cards work by generating a unique set of numbers for each transaction. These numbers are linked to a specific spending limit and can only be used once. This reduces the risk of fraud and unauthorized transactions.

When you use a virtual card to make a payment, the issuing bank typically rebates a portion of the interchange fee back to your business. Interchange fees are the fees that merchants pay to banks whenever a customer makes a purchase using a credit or debit card.

For example, receiving 1 percent cash back on virtual card invoice payments means you will get $10,000 back for every $1 million spent.

Understanding interchange fees

Interchange fees are necessary to process convenient and easy card transactions. These fees help cover the costs associated with processing transactions, maintaining secure payment networks, and providing fraud protection. By enabling smooth and reliable card payments, interchange fees support the broader financial ecosystem that benefits both consumers and businesses.

According to Bankrate, the average interchange fee in the U.S. is between 1.5% – 3.5%. The exact cost will vary depending on the type of card used, the size of the transaction, and your industry. While these fees are essential for processing cards, they do impact the bottom line of merchants. 

Virtual card rebates can help to offset these costs by returning a portion of the interchange fee back to your business. This can result in significant savings, especially for businesses that make a large number of payments each month.

The benefits of virtual card rebates

There are several benefits to using virtual card rebates to optimize payment processing costs:

Cost savings: Rebates can add up quickly. These savings can open up new opportunities for revenue streams.

Improved cash flow: Rebates can help improve your cash flow by providing you with a source of immediate income. This can be helpful for businesses that are looking to improve their working capital.

Reducing fraud risk: Virtual cards are much more secure than traditional payment methods, such as checks or ACH payments. This is because virtual cards have unique numbers that are only valid for one transaction.

Increased efficiency: Virtual cards can help to streamline your accounts payables process by automating payments and reducing the need for manual check processing. They provide more granular control over spending, allowing accounts payable teams to set specific transaction limits and restrictions.

How to maximize virtual card rebates

There are a few things you can do to maximize your virtual card rebates:

Consolidate payments

Combine smaller payments into larger, single transactions where possible. This can maximize the rebate amounts and simplify your accounting processes.

Engage your suppliers

Talk to your suppliers about the benefits of accepting virtual card payments. Highlight the immediate and guaranteed funds that come with virtual card transactions. Some suppliers may even offer additional discounts for payments made via virtual cards.

To maximize your rebates, focus on using virtual cards to pay your high-volume suppliers – the ones you make the largest payments to each month. This strategy should help you earn the most rebates, providing significant cost savings and enhancing your overall financial efficiency.

WEX’s supplier enablement can help you onboard and educate your suppliers about the advantages of virtual card payments, making the transition smoother and more beneficial for both parties. By using WEX supplier enablement, you can help ensure that more of your suppliers are equipped to accept virtual cards, further maximizing your rebate potential.

Use a virtual card program that integrates with your accounting software

This will make it easier to track your virtual card spending and rebates. Virtual card providers, such as WEX, integrate seamlessly with existing ERP systems for tracking and approval of invoices to make payment reconciliation easier. WEX provides an end-to-end payments solution, so you can manage your processes in one place.

Stay informed

Stay updated with industry trends and developments in virtual card technology. Staying informed will help you alter your strategies, ensuring you continue to maximize the benefits of virtual card rebates.

Virtual card rebates offer a valuable opportunity to save on payment processing costs. By following the strategies outlined above, you can maximize your rebates, improve your cash flow, and enhance your overall bottom line.

For more insights and updates on corporate payments, check out:

• Your guide to virtual card rebates
• Current trends in finance
• Accounts payables: Terms you need to know

Learn more about how WEX payment solutions can be tailored to your business, so you can accelerate and streamline operations while creating lasting growth and success for your organization.

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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax, and investment advisers.

Source:
Bankrate