A virtual credit card can be described as an online-only version of the debit or credit card you hold. It’s not a physical card, but a unique 16-digit computer-generated number, with its expiration number and security code, that is connected to the holder’s real card. You can use more than one, as these numbers are temporary.
As a result of the Covid-19 pandemic, an increasing number of companies have been looking for ways to move away from old-fashioned methods of payments. Even though virtual credit cards were creating a buzz even before the pandemic, the health crisis has increased their adoption as a payment mechanism, as they have proven to be one of the safest methods of payment.
Since they’re tokenized, even in case the card information is compromised by a scammer, the exposure is limited solely to the amount of that virtual card account number.
In this article, we look at other reasons why you should switch to virtual credit card payments and understand why they might be the answer you’ve been looking for.
As we mentioned, virtual credit cards are a convenient way to make online purchases and allow you to shop without giving your actual card number to vendors. This is one of the main benefits of using virtual cards, as any information tying back to your bank account is never disclosed.
Even if the virtual credit card number ends up in the wrong hands, it’s a lot easier to cancel it than closing or reversing charges on a traditional credit card. Virtual credit cards give you a leg up over scammers, particularly if you’re using a single-use number.
If you want to get an extra layer of security against hackers trying to steal your credit or debit card information, we recommend that you opt for a financial service provider like Capway that will guide you and keep your data safe whenever you’re making your payments.
Manage Auto Payments
Have you ever wondered how many times you’ve forgotten to cancel a subscription to a product or a service?
When you use a virtual credit card, your VCC number will eventually expire, and this is the perfect solution as auto payments won’t be able to go through and the subscriptions will be effectively canceled for you.
This isn’t recommended for payments you know you’re obliged to make every month – such as your electricity or heating bills, as you could be on the hook for a declined payment if the VCC expires and you forget to reset it.
Improved Payment and Remittance Data
With virtual payments, you have the option of recording additional information about the payment in the transaction’s notes, such as project codes or cost center information. In addition, this added data can be more robust compared to other payment types. For instance, ACH is known to limit any added data to 80 characters.
Streamlined and Simplified Reconciliation
Everyone in the world of business knows that time equals money and those who still reconcile credit card payments manually, know how time-consuming and laborious it is. By using virtual credit cards, you can count on easy reconciliation as a result of the extra data that is tied to the virtual payment.
Once you start using virtual cards, you can expedite your payment reconciliation by eliminating the requirement to match each expense by consulting your accounts or statements or searching for the history of each transaction. As the virtual card generates payment details, the job is done on the spot with no need to wait until the end of the month to reconcile payments.
Helps Companies Manage Cash Flow
Usually, it takes a certain amount of time for cash to leave a bank account once a company pays with a check. A delay might occur in the check making it to the supplier, or the supplier might not deposit the payment swiftly.
In this case, it can be difficult for a payer to track how much cash it has on hand. Virtual card payments are immediately reconciled, giving a company an accurate idea of how much cash it has available.
Lowers the Cost of Payments
Those who use virtual credit cards to make payments don’t need to pay anything to use them. The main reason for this is that the payment method is quick and easy and requires few labor costs. Compared to other options, these cards are a lot more affordable and in some cases, they also allow companies to earn money back or a rebate.
If by now you haven’t had the chance to look into virtual payments, we hope that the abovementioned reasons will make you realize the benefits of reduced risks, improved payment, and lower costs VCC brings.