How to Get the Most out of Your Virtual Cards

Table of Contents

Key Takeaways

• Virtual cards, whether debit or credit cards, offer accounting teams unrivaled access to granular spend data.
• The right virtual card solution will be easy to use and automatically apply company spend policies to transactions. 
• These cards are similar to their physical counterparts, but offer additional benefits. 

With a remote distributed workforce and an increase in online business transactions, spending became harder to control—finance teams lost visibility into what employees were buying. Accounting teams have found a solution: Virtual cards. And they are easier to use than you might think. 

Virtual cards can enable finance professionals to manage company spend in the era of remote work. When paired with a distributed spend management platform, virtual cards empower employees to spend quickly—without sacrificing security or compromising internal controls.

A virtual card is an auto-generated card number linked to an existing credit card account. According to a Mastercard business payments survey, companies use virtual cards to reduce costs, supplement accounting automation initiatives, and increase security.

What is a virtual card and how do virtual cards work?

Virtual cards function like physical cards—with a few minor differences regarding controls. Accounting teams can more easily see card details, set spend limits, turn-off cards, apply policies, and link cards to specific departments or uses. And they can be created and used in minutes, rather than waiting for snail mail to deliver its physical counterpart.

How can I buy virtual cards?

You typically don’t purchase virtual cards individually. Rather, these online cards are often attached to an online service or software. We can’t speak for every company, but here is how it works at Teampay:

1. You sign up for our spend management software
2. You create corporate cards with specific controls
3. Cards are automatically aligned with company policy

You can use these cards for re-occurring or one-time purchases, set limits, and cancel them at any point. 

Can I use virtual cards everywhere?

Yes, virtual cards are generally accepted anywhere traditional, physical cards are accepted. That said, using them in physical stores can be a bit more complicated. If the store doesn’t have Apple Pay or Google Pay, which your employees can use to store the card information, then you will need to enter card information manually. 

Are virtual cards secure for transactions?

Yes, virtual cards are extremely secure, arguably more so than traditional cards. Not only can they not be lost, stolen, or misplaced, but virtual cards offer a host of security features, such as:

• One-click cancelability
• Automatic policy alignment
• Ability to restrict merchants and spending limits per card, anytime
• Temporary virtual card numbers or CVVs to make hacking more challenging
• Full visibility and alerts for every transaction—with requirements to add receipts before the expiration date

Do virtual cards have spending limits?

All virtual cards have spending limits, and you can set the limit for each card. There is a difference between virtual debit cards and virtual credit cards — the latter requires approval for a specific spend limit. However, the principles of both are generally the same. 

How to choose a good virtual card?

In today’s market, there is a vast array of virtual card platforms to choose from. There are a few key criteria you can use to determine which solution makes the most sense for your organization:

1. What are you planning to use the card for? Initially, businesses consider these cards for procurement. But you can also use them for event planning, vendor payments, corporate giving, employee travel, and training programs. In other words, if an expense is covered by company policy, a virtual card can be used to make those purchases and card payments.
   
   
2. Debit or credit? Virtual cards, like traditional cards, come in debit or credit card packaging. Most prefer debit cards to limit overspending, but credit cards can offer additional reward points and savings if used correctly.
   
   
3. How will the card work with AP? Outside of mapping your spending, you’ll also want to consider how purchases will take place with the new cards. How will you handle travel reimbursements, for example, or should you update policies to prevent overspend?
   
   
4. Will it integrate with other accounting platforms? Next, will your new cards sync data and work easily with your current tech stack or accounting automation tools? Or will your team need to master new software every time they need to review the transaction.
   
   
5. Is the solution easy to use? Finally, even if your virtual corporate card solution integrates seamlessly with your accounting software and ERP, your AP team will likely still need to work within the card solution, at least occasionally. Selecting a solution that’s intuitive and simple will increase time to ROI and boost adoption. 

What are the benefits of virtual cards?

According to a report from Visa, 75% of business owners in the US alone want to shift to using cards for purchases — positioning virtual cards as the payment solution of tomorrow. A virtual card offers a host of advantages, from streamlining procurement to granular transparency for the accounting team.

Let’s cover some of the top benefits of this new payment method:

A virtual business card makes it easy for remote workers to purchase online

Physical corporate cards simply weren’t designed for online purchasing. Virtual cards, on the other hand, were purpose-built for it. E-commerce was already on the rise pre-pandemic; now, it has exploded. According to a Juniper Research B2B payments report, “COVID-19-driven remote working” resulted in an 11% growth in virtual card transactions in 2020.

And remote work isn’t going anywhere. Even after COVID protocols ease, a PwC remote work survey suggests hybrid office arrangements will continue in the U.S. Half of the employees surveyed said they want to come to the office three days per week.

As employees moved out of shared offices, finance teams struggled to enforce internal controls. The Financial Executives International’s Committee on Corporate Reporting, whose members include corporate controllers and CFOs, said: “Many controls were previously completed in-person and required physical access to locations or products.”

Virtual cards make it easy for remote workers to purchase what they need online, from wherever they are. And when paired with a spend management platform, these cards help finance teams proactively enforce purchasing policies and provide cleaner transaction data that is seamlessly passed through to the general ledger.

Furthermore, employees using virtual cards no longer have to front their own money for business purchases and risk delayed reimbursements. The finance team doesn't have to worry about chasing down receipts or how much money the business has outstanding that they owe employees.

Distributed spend management offers total control and visibility into corporate card spend

With the increase in remote work comes an increase in distributed spending - and a lack of control. Leveraging their autonomy and needing to move quickly, employees may make purchases willy-nilly, which can spiral out of control.

A distributed spend management platform can help solve this challenge by securing pre-approvals on all spend and issuing virtual cards limited to the pre-approved amount.

A finance leader at Consensys, John Chard praised the spend controls he has over physical and virtual cards. “Since we have so many cost centers, the ability to easily track spending while giving out one-time use (virtual) cards with built-in approvals and who is spending what is priceless.”

With distributed spend management, finance teams are able to monitor purchase requests and track expenses in real time. Real-time visibility is invaluable for finance teams previously stuck waiting until month-end to review corporate credit card statements and understand all the spend that has occured. When transaction data is immediately passed through to your accounting software as purchases occur, finance teams benefit from cleaner data and clearer audit trails.

Virtual cards reduce card fraud through virtual card payment

Virtual cards come with greater protection against fraud. As there is no physical card, it cannot be lost, stolen, or skimmed. Because each credit card number is tied to only one vendor and amount, stolen card numbers cannot be used elsewhere for more expensive purchases.

If a card is used at an unapproved vendor, the distributed spend management platform will automatically alert you of the discrepancy. This allows the finance team to act immediately to investigate the purchase and cancel the card if necessary, without risk of additional fraudulent purchases.

Furthermore, if a card number is stolen, you can easily cancel that card without worrying that it is tied to other vendors. For example, if you need to close your CRM card, there’s no risk that the same card was also used to pay for cloud services. Thus, there will be no interruption in service due to canceled cards.

Distributed spend management eliminates manual reconciliation for all corporate cards

Typically, finance teams manually review and code transactions on credit card statements to close the books at month-end - a tedious and time-consuming process. According to the American Productivity & Quality Center, month-end close can take up to 10 days. Distributed spend management automates reconciliation, freeing your finance team to focus on more strategic work.

In the words of Sieun Kim, Senior Accountant at Branch, “We can reconcile all of our credit card accounts within a couple of days! Before Teampay, this process often took more than a week.”

Furthermore, MHR Analytics found that 73% of finance professionals were not confident in their month-end close processes, due in part to “chaotic datasets.” Manual reconciliation means human error, which causes inaccurate reporting and additional time spent retroactively correcting mistakes. With automated reconciliation, you can rest assured that your data is accurate.

In fact, distributed spend management requires employees to code their purchases upfront, so there is no need to fill out expense reports after the fact. This eliminates a whole other manual process that saves both finance and non-finance employees a ton of time.

“Our employees can get everything done for their purchases right off the bat and don’t have to deal with any kind of expense report or paper receipt later on - and that’s a great thing for us accountants because we can’t stand paper,” said Brenda Villanueva, Senior Accounts Payable Specialist at One Medical.

Issue virtual cards via a distributed spend management platform

As remote work continues to grow, virtual card adoption will become a necessity. Virtual cards are the simplest way for employees to buy the services or goods they need to do their jobs online. For finance teams, virtual cards issued by a distributed spend management platform provide complete control over spend and real-time visibility into company-wide purchases. The result? Finance teams have the freedom to pursue projects that add value to the business.

Start tracking your spend with Teampay

Virtual cards are a gamechanger for businesses big and small when it comes to tracking spend data, preventing fraud, and avoiding misuse. But it’s only one part of an optimized spend management system.

As we mentioned before, most corporate card options are attached to larger AP and procurement solutions, such as Teampay's spend management platform. Organizations can leverage Teampay’s virtual cards, alongside a host of other tools such as AP automation, purchase order approval, streamlined procurement workflows, and more to limit costs and identify savings. 

To discover more about how our virtual credit cards can transform your processes, check out our full list of virtual corporate card features.