Why a virtual card might be the best choice for your business

It’s common practice for companies to offer corporate cards, or expense management cards, to employees so that these team members don’t have to pay out of pocket and later be reimbursed. Not every business is aware, however, that virtual cards can be an even more efficient and secure way of managing company expenses.

While credit and debit cards are traditionally physical objects, kept in a wallet, virtual cards provide all the same functionality without being tied to a tangible object. In other words, a virtual card is a set of card details – including a card number, expiration date and a Card Verification Value or CVV – tied to an account. It can be used to make online payments. 

This article will dive into the benefits virtual cards can offer to businesses, especially within today’s digital-first economy. 

The rise of virtual cards in business

Managing business expenses has become a much more secure and streamlined process in the digital age, and virtual cards are one reason for this. A recent study found that more than a third of businesses in North America use virtual cards. Speed, transparency and security were cited as key benefits.

The changing landscape of business has also factored into this shift. Online transactions are now the norm, with digital payments penetration increasing to 89 percent in 2022, according to McKinsey. Remote work has also rocketed since 2020, with 12.7% of full-time employees working from home in 2023. As companies’ team members are more scattered, and purchases are more often happening online, the conditions are right for many businesses to make the shift to virtual cards.

Security advantages of virtual cards

One big benefit of virtual cards is that they cannot be lost, stolen or compromised by somebody stealing data using the physical card itself. Cloning, also known as skimming, is a practice whereby card information is copied at a credit card terminal using an electronic device. The data can then be transferred to the magnetic strip of a new card. This isn’t possible with modern chip-and-PIN cards, however the information printed on these cards can be used to carry out online transactions, especially when paired with other forms of identity theft. 

In contrast, virtual cards exist only on your phone, computer or tablet. Digital devices can be kept secure thanks to authentication tools like fingerprint scanning, passcodes and facial recognition technology, so there is less scope for the wrong person to get access to the card information. While this information must then be transferred digitally in order to complete the transaction, security protocols like the Payment Card Industry Data Security Standard (PCI DSS) help ensure that the process is completed securely.

If there are any problems with a virtual card or the card isn’t currently being used, there is the option to instantly freeze or cancel it. This helps mitigate misuse and fraud. It is also possible to create single-use cards, which expire as soon as a specific purchase has been completed. This is another strategy to reduce the likelihood of theft or fraud. 

Stay on top of employee spending

Most virtual card issuers allow businesses to set up spending limits for different departments, projects and spending categories. This makes budget management easy and flexible enough to cover all of a business’s needs. For instance, you could create employee cards that have a limit for meals and entertainment, or a card specifically for vendor payments. You can even create merchant-locked cards, which can only be used with a certain vendor. 

When these cards are being used, managers can be kept in the loop with notifications in real-time to ensure no expected or suspicious activity occurs. This degree of transparency helps hold employees accountable, and lets managers quickly respond to requests for funds and verify uploaded receipts. 

Instantly create and use virtual cards

It takes an unnecessary amount of time and effort to set up a new card with a traditional bank and wait for it to arrive in the post. It should be a quick and pain-free process to give employees access to funds as and when they are needed.

With a virtual card, you can jump online, issue a card – perhaps just to cover one urgently-needed purchase – and create a card in moments. It’s immediately ready to use. This allows virtual cards to be seamlessly integrated into existing business processes, enhancing overall operational efficiency.

Multi-currency cards for global spending

Multi-currency virtual cards, such as Airwallex’s Borderless Cards, not only come with all the benefits of virtual cards; they also allow you to avoid unnecessary FX fees on international expenses. Borderless Cards allow employees to make purchases in multiple currencies from held balances in the company’s multi-currency wallet, eliminating unnecessary FX conversion fees. They will also help you put an end to surprise foreign transaction fees and other hidden charges, so you can reinvest every dollar back into your growth.

Multi-currency Employee Cards can be issued to team members around the world to streamline their local and global purchases. So if you have offices in the US, Asia Pacific and Europe, you can use the same card programme for each office, and keep track of company spending on a single platform.

Streamline your expense management system

The process of expense requests, approvals, and then reconciling and categorising all transactions using accounting software can be frustratingly inefficient. There’s a risk of human error, misreporting, and lost paperwork, not to mention the time and resources involved in getting everything signed off and filed away.

Virtual card providers, on the other hand, can let you link your card transactions with the accounting software you use, so the whole process can be automated. Every purchase is synced with the accounting system, including what category of expense it should be filed under. Expenses can also be tracked and are visible in real time, so there’s never any question what’s happening and why. 

Some virtual card programmes, such as the one offered by Airwallex, come with built-in expense management software. This makes setting up the system even easier. Just create an account and enable employees to buy the materials they need immediately.

The fact that so much of the expense management process can be automated and sped up means that more of your team’s time is freed up for doing the work that really matters. The fact that you can be so specific about how much budget you allocate for each transaction, category, team or employee also helps eliminate wasted spend, and the oversight it allows also helps ensure that unnecessary spending is kept to a minimum. 

How one tech company saved money with Airwallex Borderless Cards

Mr Yum is an Australian tech startup that manages delivery and collection orders for restaurants and bars. It started in Melbourne and quickly went international, with operations in the US and UK. As the company grew, the team decided to open an Airwallex Global Account and issue their team with Airwallex Borderless Cards. These are multi-currency virtual cards with flexible spend controls and market-leading FX rates.

Airwallex helped Mr Yum issue more than 30 cards in just a few clicks, launch in the UK three months faster, and save more than $50,000 on international transaction and FX related fees. Mr Yum’s Financial Controller, Corey Payne, set up spending limits on the cards so that employees don’t need to request approvals for smaller expenses. He’s able to manage all the spending controls from a single platform.

When receiving payments from customers in the UK, Mr Yum doesn’t need to lose money from a forced currency conversion. Instead, the company was able to create an Airwallex UK Global Account online in five minutes, which allowed them to settle, receive and hold funds in GBP. When it comes to costs such as SaaS and advertising, money can be spent directly from the UK account and from the US account. This avoids a costly double conversion.

Create a virtual card in moments

If you’re ready to take the next step in modernising your business finances, take a look at Airwallex’s corporate virtual and physical cards program. These multi-currency cards enable cost-effective cross-border spending. They come with inbuilt expense management that can be integrated with your pre-existing system, providing enhanced security, efficiency, and financial control.

Click here to sign up for an Airwallex account today.