Understanding Virtual Cards
In the context of personal finance, a virtual card is a unique virtual credit card number linked to your chosen credit account. This secure method helps protect you from fraud during online shopping or data breaches from banks or third parties.
In an organizational context, virtual credit cards serve a similar protective function for funds and information, but with some differences. For example, you can create unique credit card numbers with preset spending limits or restrict usage to specific vendors only.
Additionally, you can set spending limits, expiration dates, and manage unique card numbers electronically. Virtual card numbers allow you to lock, manage, or delete the virtual account depending on your card issuer.
Benefits of Virtual Cards
Virtual cards offer a variety of advantages. With configurable spending limits and expiration dates, they make it easier to control employee spending. When a card expires or a virtual number is deactivated, most systems automatically return any remaining balance to the main account.
Virtual cards also improve expense visibility, enabling tracking over specific periods and generating reports by employee, vendor, and more. Most providers include these features, allowing you to easily identify irregular spending or budget overruns.
Virtual cards can also influence organizational spending culture. They make approval processes more proactive. Team members using personal cards can make purchases and report them afterward. Authorization starts when team members receive a card upon joining, as each virtual number is linked to the primary account holder, serving as a pre-approved procurement tool.
Moreover, virtual cards are often a much more cost-effective option for companies. Considering the high fees for small businesses trying to obtain credit cards, virtual cards linked to supported deposit accounts or debit cards allow employees to make purchases without accessing those accounts directly. This provides better control and visibility over spending.
How This Revolution Works
Adopting virtual credit cards protects against most fraud sources, reduces data leak risks and input errors, and provides full visibility and management of expenses. They also support true automation for accounts payable—something not achievable with traditional payment tools.
Virtual cards eliminate risks associated with refunds, approvals, and even card theft. Since these cards cannot be lost, duplicated, or stolen, pre-set purchasing rules and spending limits, combined with security and convenience, make virtual cards a powerful business tool.
How to Get Started
Depending on your location, providers may vary. Simply searching online is sufficient. The most common usage is a single-use account (SUA) with a standard 16-digit number that can be used once. Providers issue the number after an employee submits a spending request and finance or operations approval is given. The number is then active with a pre-set limit.
Today, security, accuracy, and visibility are the focus. But don’t forget the impact on accounts payable. With the ability to generate and send the card number to vendors automatically upon invoice approval, vendors are authorized to charge the exact approved amount—no more, no less.
This way, you eliminate vendor errors and can pay larger amounts without risking fees or unauthorized charges.
