Virtual cards are becoming increasingly popular after companies realised the advantages offered by the payment method during the COVID-19 pandemic.
The ability to make chargeback claims to refund money during the pandemic demonstrated how virtual cards offered protections that other payment methods lacked. As several airlines went into bankruptcy or cancelled flights, virtual cards enabled online travel agencies (OTAs) to file chargebacks for purchases used to reserve flights.
Dave Robinson, COO and Deputy CEO of Pax2pay comments on the evolution and usage of virtual cards in the travel industry as part of whitepaper published by The Payments Association and FIS:
“During the pandemic, we have never seen anything like it. When [airline] Monarch and [travel agency] Thomas Cook collapsed it was tough. However, nothing prepared us for what was coming down the line when it came to the Covid pandemic. We were literally processing thousands of chargebacks per day. The media was full of reports over airlines not issuing refunds or giving credit notes. With chargebacks, lots of people got their money back. Lots of companies now see the benefits, so they want to use virtual credit cards as their primary payment mechanism, knowing the protection is there and they can use it if they need to if the airline fails to deliver the service.”
Using virtual cards was certainly advantageous during the COVID-19 pandemic. They offer effortless automated reconciliation and record matching, as well as the added benefit of a lower carbon footprint by not using physical plastic credit cards.
What are the barriers for virtual card users?
If a company considers using virtual cards, it will need to update processes, rewrite company policies on card usage and expenditure, and integrate any new solution with their existing expense management, accounting or enterprise resource planning (ERP) portals.
Some suppliers may be reluctant to switch from tried and trusted payment methods, concerned about the merchant service charges associated with cards, or how they might impact settlement terms.
Concerns around integrating new solutions and costs disappear, however, because accessing better payment processes, actionable data insights, and effortless compliance significantly improves the payment experience. Thus, companies can hit the ground running with a virtual card solution that meets their demands with the right guidance and expertise in place.
In fact, smaller businesses are far more likely to use additional financial solutions which further help them grow their business if they have a good experience with virtual cards.
Opportunities are endless
Issuers, financial institutions and payment platform providers must educate and encourage companies to seize the moment if they wish to make the most of these opportunities. The tangible, immediate benefits of virtual cards, and allaying misplaced concerns over costs, solution providers will allow companies to deepen employee and supplier relationships, strengthen their foundations and position themselves as true innovators in the payments space.
Teaming up with the right expertise is crucial as it offers the quickest route to market. Collaboration also leverages complementary skills and strengths, and gives companies the smoothest implementation of new solutions, and the widest choice of value-added services.
While many companies across different sectors see many advantages for digitising payment and operational processes, virtual cards are gaining rapid traction. Virtual cards truly have a promising future ahead.
To learn more and download the whitepaper from The Payments Association, on the topic of virtual cards, visit: https://thepaymentsassociation.org/whitepaper/virtual-cards-how-companies-can-unlock-the-5-trillion-bionic-b2b-opportunity/
About the author:
Anjana Haines is the Head of Content at The Payments Association. She leads the organisation’s digital content strategy and events.
Identified as a high potential diverse leader, Anjana has over a decade of experience in legal and financial B2B publishing.
Through a range of articles, podcasts, videos, webinars, face-to-face events and much more, Anjana delivers content to payments professional that offers market insights and strategic guides.
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