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In a November 2022, New York Times article Jeremy Engle discusses the demise of cash. Engle cites a statistic that as of 2022, 41 percent of Americans say they go cashless in a typical week, up from 24 percent in 2015. Another recent Federal Reserve study illustrated that this trend accelerated during the COVID-19 pandemic. The study also found that Americans ages 25 to 34 are less than half as likely to use cash as those in the 65+ age bracket. With cash becoming obsolete, virtual currency and the use of virtual cards for business payments has become increasingly necessary.
Online shopping is expected to continue to increase in the coming years. More than 20% of retail purchases in 2023 are expected to be online purchases, and that’s expected to reach 24% in 2026.
Similar trends are expected in B2B payments. Over half of chief financial officers (CFOs) say they are using ePayables with virtual cards more frequently due to digitization, according to a recent study. As the name suggests, virtual cards don’t exist in a plastic format. Simply put, a virtual card is an electronic card number. It’s typically used only once and, in addition to being touchless, has two major benefits: it streamlines reconciliation for both buyers and suppliers and it also makes the transaction more secure.
Explore further with our “What is a Virtual Card?” Infographic.
Virtual cards work behind the scenes as a digital payment method, providing a secure payment option for you while protecting your data from being compromised.
Virtual cards use virtual card numbers (VCNs), which work just like the card numbers on a physical card. Whether you decide on using a single-use number or a virtual card with a limit, VCNs enable automatic reconciliation. There are 4 easy steps how a virtual card works:
Each authorization request is evaluated across a range of controls to avoid fraud. These virtual cards are also accepted globally by suppliers via their existing card terminals.
Virtual cards have a variety of advantages for businesses and suppliers, including:
Check out our blog post to learn more about the advantages to using a virtual card!
Through single-use virtual cards and lodge cards, businesses can take advantage of the highest level of security, control, and efficiency when processing payments.
A single-use virtual card is a card with a number that’s only valid once. After your payment has been processed, the virtual card number becomes invalid. The controls associated with these cards can be as tight as you want them to be. You can control the expiration date, what merchants are allowed to be used with the card, and the amount of cash available for use. Single-use virtual cards can be used with one specific amount only, or for multiple transactions that add up to that specified sum. For example, a virtual card can be used for $200 exactly, or it can be used for five $40 transactions, depending on how the card is set up. These cards also process payments faster than a traditional credit card, which allows reconciliation to happen more quickly.
A lodge card has an established credit limit for goods, services, or invoice payments and is provided to a vendor with that credit limit already established. Transactions from this type of card can never exceed their authorized credit limits, but their identifying numbers can be used multiple times. With lodge cards, it’s possible to set controls for expiration dates and other factors. Because lodge cards reuse the same virtual number repeatedly in different transactions, you will want to use them with trusted vendors only, and as sparingly as possible.
As your business is shopping for virtual cards, look for a provider that offers you flexibility and security. The best virtual card platforms allow you to configure credit, implement spending controls, and attach authorization to each transaction.
Payments are critical to your business operations, so choose a company that is stable and can scale as you grow. The very best providers immerse themselves in understanding your operations and objectives and maintain a consultative approach to help you optimize the program for the life of the solution.
Click here to learn more about how WEX payment solutions can be tailored to your business, for optimized operations which create lasting growth and success.
Learn more about Payments by visiting WEX’s resource, Payments 101.
Editorial note: This article was originally published on November 16, 2019, and has been updated for this publication.
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