Virtual cards have steadily been growing in popularity, from North America to Europe. And more explosive growth is predicted. According to Juniper Research, virtual card transactions globally are expected to jump by 340%, exceeding USD 121 billion by 2027. At the same time, virtual card transactions through mobile payment methods will grow from 5 billion in 2022 to 53 billion in 2027.
Virtual cards can be linked to digital wallets like Apple Pay or Google Pay for easy payments. This has been a major reason behind their growth, as it has allowed virtual cards to tap into the existing user bases of mobile wallets. The higher security offered by virtual cards also make them an ideal choice in a security-conscious market.
Adoption of virtual cards in B2B payments
Digital payment methods hold clear advantages over paper-based ones. Hence, their growing appeal for B2B payments. Virtual cards, with the ease they bring to payment automation, is becoming much sought-after by corporates. In the next five years, B2B virtual card volumes in the US alone will swell up to USD 71 billion. This is 72% of the global volume!
A recent RFI Group study commissioned by Visa, found that virtual cards are becoming a go-to choice for B2B payments in North America. 73% of businesses in the US, 93% in Canada, and 54% in Australia find them appealing. Another PYMNTS-Amex report found that 28% of CXOs plan to invest in virtual cards soon. Much of this is being driven by the increasing use of virtual cards to pay for recurring, bulk purchases. Speedier transactions and higher security of this payment method further adds to its pull.
So, what is a virtual card and how does it work?
A virtual card is just like a physical card, but in digital form. It is not linked to any physical card. It can be used only for one-time purchases or a bunch of related bulk purchases. This significantly increases their security, since the card is useless once it has been used for a specific purchase. A virtual card has its own unique card number, expiry date, and CVC.
A virtual wallet works exactly like a physical card. It can be linked to digital wallets like Apple Pay or Google Pay, and used easily to make contactless payments, both in-store or online. Some even allow withdrawals from ATMs.
Why virtual cards for B2B payments?
Virtual cards can help companies enhance payment security and transparency to become more efficient. It helps decrease fraud, improve vendor relations, and provides more insight into internal spending. Benefits of virtual cards include:
1. Safer payments
The top reason to use virtual cards is because they are highly secure. Virtual cards remove the risks related to physical cards. They cannot be stolen, lost, or hacked. Because virtual cards can be issued for both single use or a bunch of related purchases, and can be limited to specific suppliers, the risk of fraud is significantly reduced. They also use tokenization to keep things more secure. The digital footprint of these cards also makes suspicious activity easier to track. This makes them great for businesses with high traffic to detect fraud. Virtual cards also make compliance and auditing simpler.
2. Improved Efficiency
Virtual cards allow payments to be fully automated, whether they are one-time or recurring. They help you to automate reconciliation for invoice and on-demand payments and staff costs. Thus, you spend less time and resources on doing these tasks manually, and improve your business’s efficiency. Virtual card payments include detailed payment info, which make it easier to track invoices and payments receivable. The detailed payment data can be emailed or imported directly into a business’s ERP system for automated reconciliation. This ensures no one wastes time tracking payments manually.
3. Greater transparency
Virtual cards give you centralized and customizable data on every transaction. This helps in more informed decision making. You can also align invoices against payments and work orders, and manage your cash flows better. This eases the burden on accounts teams and your business.
4. Stronger supplier relations
Virtual cards help you pay your suppliers faster, and on time. They also enable a merchant to give suppliers access to real-time data on payments, which in turn, helps suppliers to automate and track their invoices and due payments easily. This helps you forge stronger relations with your suppliers.
How to use a virtual card for B2B payments?
You can use a virtual card in pretty much the same way as you would a physical card. Your virtual card comes with its own unique number, CVC code, and expiry date. It can be linked to your Apple Pay, Google Pay, or PayPal digital wallet. You can use it for paying online or in-store via your mobile wallet, much like you would do with an actual card. Some cards are prepaid, which means you need to top them up by money transfers from your bank account. Some popular virtual cards in Europe include WEX, Mastercard, Revolut, N26, amongst others.
How Can Novalnet Help?
Based on your business goals, we can help you address your payment-related queries quickly. Novalnet is a global PSP, trusted by Europe’s leading brands to handle their payments. Our state-of-the-art technologies and methods help you accept payments globally. From our instant payment plug-ins to our AI-based risk management tools, we have the resources to get your payments up and running in no time, and with zero hassle.
Reach out to us today to know more.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.