Credit card companies, like American Express, Visa and Mastercard, are making moves to drive more B2B vendor payments to cards. Recognizing an opportunity for organizations to support initiatives to transition away from paper check and reap the benefits of card payments such as rebates, rewards and cashback, these companies are focusing on accounts payable software and areas to integrate.
So why would a company use a virtual card vs. their actual commercial card?
Let’s first examine what a virtual card is. This form of electronic payment acts as a one-time use credit card. You assign a specific amount and a due date for when the card must be processed (the card is voided automatically after this date). A system, your bank or an accounts payable automation solution like MineralTree, generates a card number for the specific transaction. As soon as the card is processed for the payment amount, the card number is null and void.
Giving vendors your actual card details is a gateway to fraud and virtual cards overcome this while still allowing companies to gain the benefits of card payments.
It’s clear that companies recognize the benefits of paperless accounts payable yet are hesitant to transition from paper check payments but one of the primary reasons behind this is the difficulty of doing so and not having technology in place to make the transition easy.