Not as Intuitive as Its Predecessors
Early card applications in B2B payments were relatively straightforward, with clear purposes like travel and expense (T&E) cards, which enabled staff to pay for business-related travels without personal funds. The acceptance of spending via company-issued cards expanded to indirect expenses such as maintenance, repairs, and operations. Purchasing cards empowered employees to make payments on behalf of the company without raising purchase orders, providing cost savings from bank rebates.
You have staff members who need to visit a customer or procure tools and cleaning materials,” explained Hugh Thomas, Commercial & Enterprise Lead Analyst at Javelin Strategy & Research. “Requiring them to pay out-of-pocket is impractical, and raising purchase orders takes valuable employee time. Purchasing cards offer a solution by allowing controlled spending that offers rebates in return.” However, with virtual cards emerging, businesses now consider using card networks for diverse payments including goods purchases and supplier payments. Virtual cards come with controls such as transaction limits and vendor-specific usage.
A virtual card can be used to pay one specific vendor on a particular day,” Thomas noted. “It combines the benefits of a card with chargeback protections, making it versatile but challenging to apply intuitively.”
Shortening the Payment Cycle
Virtual cards can further shorten payment cycles by eliminating vendor checks and purchase orders. A company might pay a one-off vendor without sharing any banking details, thus avoiding lengthy processes.
This approach reduces costs and streamlines payments for businesses that engage with vendors infrequently, revealing the broader applicability of virtual cards in B2B transactions.
Everyone Has Exigencies
Virtual cards are not just about X-for-Y products. Thomas identified key traits from the online travel agency (OTA) industry, such as a large number of potential vendors and flexible payment terms.
In healthcare payments, for example, multiple parties have varying needs for faster or slower payments. Virtual cards offer data-intensive transactions suitable in this complex landscape.
Selling Opportunistically
Virtual card usage lacks a standardized approach across financial institutions, with each bank having unique supplier payment patterns. Banks over-indexed in sectors like healthcare or utilities indicate opportunities for virtual cards.
The lack of common awareness about where and how to best use virtual cards highlights the need for businesses to adopt them opportunistically rather than through industry-specific criteria.
