Traditional vs. virtual payments: Why it's time to make the switch

The way we conduct B2B transactions is constantly evolving. In the corporate payments industry, the shift from traditional methods like checks and cash to virtual payments is gaining momentum. While checks have long been the standard, virtual payments offer a compelling alternative with a few advantages.

Let’s dive into the key differences between traditional and virtual payments, exploring current trends in payment technology, and how they are shaping the future.

Traditional payment methods have some limitations

Traditional payment methods, while familiar, come with inherent drawbacks that can hinder business efficiency and growth. Here’s a closer look at some key limitations:

Costly processes

Issuing checks involves processing checks, envelopes, and postage, not to mention the labor costs associated with manual processing, approvals, and reconciliation. These expenses can add up significantly, especially for businesses with high transaction volumes.

Prone to error and fraud

Manual data entry during check processing increases the risk of errors, leading to delays, incorrect payments, and the need for rectification. Check fraud is another concern, with businesses facing potential financial losses.

Slow payment cycles

Tracking cash flow and spending patterns can be challenging with traditional methods. Businesses lack real-time insights into transactions, making it difficult to identify areas for cost savings or optimize financial management.

Virtual payments are on the rise, offering greater security, speed, and revenue opportunities

According to global payments expert, Juniper Research, virtual payments, such as virtual cards, are expected to rise from 36 billion in 2023 to 175 billion in 2028. Virtual payments offer a good alternative to traditional methods, addressing many of their limitations and providing additional benefits:

Greater efficiency and cost savings

Virtual payments eliminate the need for physical checks and manual processes, leading to significant cost reductions in printing, postage, and labor. Faster processing times and streamlined workflows further contribute to overall efficiency gains.

Improved security and reduced fraud

Virtual payments leverage encryption and security features to minimize the risk of fraud compared to paper checks. Many virtual payment solutions offer additional layers of security, such as multi-factor authentication and spending controls, for added peace of mind.

Faster payments and increased cash flow

Virtual transactions clear almost instantaneously, ensuring faster access to funds for both businesses and suppliers. This improves cash flow and eliminates delays associated with traditional checks.

Real-time visibility and control

Virtual payment application programming interfaces (APIs) provide real-time transaction data and detailed insights into spending patterns. This allows businesses to make data driven decisions, optimize their cash flow, and identify potential cost saving opportunities. For example, with WEX, there are built-in APIs that allow for real-time notification so you’ll know immediately when purchases are made, making payment reconciliation easier.

Greater convenience and user experience

Virtual payments offer convenient and user-friendly experience for both payees and payers. Payments can be initiated and received electronically, eliminating the need for physical checks and mail.

The future of payment technology is undoubtedly digital. As technology continues to grow, we can expect to see even more innovative virtual payment solutions. Here are some potential trends to watch for:

Mobile payments: Another Juniper Research study claims the total number of digital wallet users will exceed 5.2 billion globally by 2026 – that’s more than half the global population. Mobile wallets and instant payment services are becoming increasingly popular, enabling secure and convenient payments on the go. This trend is likely to continue, with businesses integrating mobile payment options into their operations.

Automation: Automation will play an increasingly significant role in streamlining payments by automating tasks such as fraud detection, invoice processing, and reconciliation. WEX AP solutions offer automated reconciliation to simplify the accounts payables processes. Automated solutions can also help analyze spending patterns and potentially recommend cost saving opportunities.

Enhanced security: As technology advances, we can expect to see even more sophisticated security features incorporated into virtual payments. This will further enhance the security and trust associated with virtual payments

How to make the switch to virtual payments

Transitioning to virtual payments is a strategic decision that can benefit businesses of all sizes. Here are some steps to consider when making the switch:

Evaluate your needs: Assess your current payment methods and identify areas for improvement. Consider factors such as transaction volume, security requirements, and integration needs.

Research virtual payment solutions: Explore the various virtual payment options available, such as virtual card providers like WEX. Choose a solution that aligns with your specific needs and budget.

Partner with a reputable provider: Select a virtual payment provider with a strong track record, secure infrastructure, and reliable customer support.

Implement the solution: Work with your chosen provider to integrate the virtual payment solution into your existing enterprise resource planning (ERP) systems.

Educate your team: Train your employees on the new system to ensure a smooth transition and address any concerns they may have.

The future of corporate payments is virtual. By considering virtual payment solutions, businesses can access benefits from reduced costs and improved efficiency to enhance security and greater control over their expenses.

Why choose WEX?

With a focus on virtual cards, WEX empowers businesses to control spending, improve visibility, and get greater security over their transactions. WEX virtual card solutions cater to a wide range of industries, providing tailored options for expense management, travel and entertainment, and procurement.

By partnering with WEX, businesses can benefit from expertise in payment processing, fraud prevention, and data analytics. WEX is committed to innovation, customer satisfaction, and supporting business growth.

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

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:
Juniper Research

Traditional vs. virtual payments: Why it’s time to make the switch