Virtual cards can be a lifesaver when it comes to business travel as in the corporate world, checks and cash have become inefficient. Overtime, they’ve been replaced by more convenient digital payment methods, which offer numerous advantages for both businesses and employees who travel for business. Enter virtual cards – an exciting step toward smart corporate spending.
What are virtual cards?
A virtual card is a digital copy of your physical bank card that's stored on your device. Virtual cards, especially for businesses, can exist in absence of any physical card. It can be used to pay contactless in stores or for online transactions. A virtual card has all of the same card details and identification information as a physical credit or debit card, including the:
- Cardholder’s name
- Credit card number
- Billing address
- Expiration date
The difference is that virtual credit cards provide online retailers with dynamic information so that every time you pay using a virtual credit card, the verification code is different. The 16 digits are created solely to pay for a single transaction at a predetermined amount.
The types of virtual cards
There are two types of virtual cards for business travel:
- Virtual credit cards: A corporate virtual card is like a typical card where your management platform will add a credit amount to your card that serves as your balance. When a sum of money is added to an account, it’s possible to create a virtual credit card, assign budgets, make payments and pay the amount spent at the end of the payment period.
- Virtual debit cards: Virtual debit cards are similar to the ATM cards for bank accounts, except that these can be for business usage. With virtual debit cards, your company can load a certain amount to a business bank account balance, which is reflected in the overall card balance. So, while making transactions using virtual debit cards, business travelers can pay from company money, eliminating the need for reimbursement.
How virtual cards affect business travel
The travel sector has used virtual cards for more than 20 years now. This payment method became indispensable for business travel because of its accessibility, ease of issuance and the high level of transparency.
5 benefits of virtual cards for business travel
Benefits of a virtual credit card program for your company are abundant. Here are five of them:
1. Improved costs tracking
By removing the traditional plastic card from the equation, business travel expenses are automatically tracked and the total trip cost is captured in one place.
2. Prevention of fraud
With no more lost cards and no hacked accounts, the chance of fraud will drop. With virtual cards you can freeze, cancel or delete a card instantly when you realize a security breach or compromise happened.
3. Real-time visibility of payments and transaction activity
With virtual cards, you get the information you need when you need it. Cardholders can view card balance and drill down into the transaction details to stay on top of the spend. When it comes to declined, cancelled or suspended cards, or threshold limits, both travel managers and cardholding travelers are notified. This enables business travelers to have a higher accountability.
4. Simplified expense management
Business travel managers are able to collect payment information for your company’s finances, seeing and tracking payments across remote teams which will allow for controlled and secured corporate spending, with no need for reimbursement or cash advances.
5. Improved spend control
With virtual cards, you’re able to set up cards for each expense and designated budget. You can set limits that don’t allow spending beyond the assigned budget, with notifications updating you of the balance as it changes.
What can virtual cards be used for during business travel?
Many aspects of business trips can be optimized by using virtual cards:
For traveling employees, virtual cards can be used for taxis, Uber or other rideshare services. Cards can also be loaded with per-diem amounts to cover any online or in-app purchases.
2. Streamline the accounts payable process
Virtual payment cards are an effective replacement for inconvenient paper and labor-intensive tasks. With virtual cards, the members of the Accounts Payable team have to direct their energies towards financial planning and other responsibilities.
This saves time and decreases the vulnerability towards human error, while also streamlining the whole accounts payable process.
3. Hotel booking and payments
Just as with transportation, it's way more convenient to pay with a virtual card than with a physical one. Also, accommodation sums are most likely higher than for ride sharing costs, so the use of a virtual cards can protect you from fraud or financial threats.
4. Food and beverage expenses
By using a virtual card, business travelers can seamlessly pay contactless for any business expenses directly from company balance with knowledge of the remaining assigned budget. This way corporate travelers are able to easily stay within budget and not pay out of pocket during their trip, as the card can be loaded by the company.
Duty of care and virtual cards
In terms of improving the safety and security of business travelers, virtual credit and debit cards are hugely beneficial. They offer streamlined, contactless payments for processes like checking in to a hotel that can otherwise involve a lot of human interaction.
Further, these cards are safe and secure, limiting risk of being robbed or pickpocketed while traveling for business, managing duty of care for business travelers.
Virtual cards and invoicing business travel
Virtual cards, from a secure and well-chosen provider, offer complete control as they can be integrated with your accounts payable automation system. Here, a process for requesting, approving and generating virtual credit cards is based on your businesses unique needs.
This is similar to invoice processing, but the approvals take place before the purchase is made. These virtual cards also automatically capture transactions as they happen and can be synced with your enterprise resource planning system.
Virtual cards and vendor management
You can create virtual payment cards in your card management platform based on the number of vendors you have. This way, you see the total number of vendors your company has across all departments and how much money is spent on them.
This visibility over accounts payable is also advantageous when you are working on expense analytics and insights.
For corporate travel management, virtual cards are more beneficial than physical cards, weighing all the above factors. With any collaboration with partners or vendors during business travel, timely payments are another guaranteed feature.
Businesses, large and small, can benefit from the increased security and efficiency that comes with providing business travelers with virtual cards for use during corporate trips.
Business travelers themselves also benefit from the convenience and ease of virtual, contactless payments that are timely and secure.