How to manage team expenses with virtual debit cards

Tired of sharing corporate cards and using clunky, outdated expense management systems? It might be time to switch to virtual debit cards.

Virtual debit cards had a global market size of USD281 billion in 2021. Analysts expect the market to reach USD1,893 billion by 2031, representing total growth of over 673% and a compound annual growth rate (CAGR) of 21.3%.

So, what’s all the fuss about?

Virtual debit cards offer a number of benefits over their physical counterparts, from convenience to enhanced security. And they present a superior way for businesses to manage team expenses.

Let’s take a look at virtual debit cards and how they differ from physical cards. We’ll also examine how they can help you track employee spending and empower international purchasing.

What are virtual debit cards?

As the name suggests, virtual debit cards are virtual versions of the physical debit cards we all use regularly. 

Just like with physical debit cards, you can add and manage money with an online personal bank account or business account from your computer or smartphone. 

So, how do you use a virtual debit card?

Your virtual debit card comes with a 16-digit card number,expiry date and security code, just like a physical card. You can use these card details to make online purchases and online payments in the same way you would with a physical card. 

To make in-store contactless payments, you can add your virtual card to digital wallets like these:

• Apple Pay

• Google Pay

• Samsung Pay

Digital wallets use tokenisation to keep your card data safe, making this a safer way to spend money on the move. 

What’s the difference between a virtual card and a physical card?

The primary difference between virtual and physical cards is that virtual cards exist only digitally. They have no physical counterpart.  

Depending on the card issuer, virtual cards also come with a range of benefits that can help you manage company spending in a safer and more efficient way. 

Convenience

You’ll typically have to wait seven to ten business days to receive a new physical card. But with virtual cards, you can create a new card at the click of a button, receive your card details instantly and start spending right away.

Security

Virtual cards cut down the risk of card fraud to practically nothing. For a start, there’s no possibility of your card being lost or stolen. 

Secondly, virtual cards lack the magnetic strips that physical cards have, meaning they can’t be targeted for card skimming. What’s card skimming? It’s when criminals install technology at places like ATMs or petrol pumps to record the information stored in your card’s black magnetic strip.

Single-use cards

Because virtual cards are so easy to spin up, it’s possible to create a card for a single transaction and cancel it as soon as the transaction has been processed. 

Single-use cards are a great way to protect your business from card fraud online. Once the one-off payment has been made and the card has been cancelled, those card details can no longer be used to access your money. 

Easier management

Virtual provide an easier way to manage employee spending. You can set controls that limit when, where and how much cardholders can spend (more on that later), assign new cards for specific projects or time frames, and freeze or cancel cards in a click.

Airwallex virtual cards also come with in-built expense management, meaning you can categorise expenses on the go, capture receipts and automatically reconcile transactions in your accounting software. 

Low or no international transaction fees

Not all virtual cards come with this benefit, but Airwallex cards do.

Our borderless cards allow you to spend globally with no international transaction fees. Our cards are also multi-currency, meaning you can hold up to 24 currencies in your account and avoid FX fees when spending abroad. 

If your business operates internationally, these cards can save you a lot of money.

Sustainability

One final benefit of virtual cards is their smaller carbon footprint, as the card issuer doesn’t have to create and mail a plastic card to you. 

Considering that 25.2 billion debit, credit and prepaid cards were in circulation in 2021, a society-wide transition to virtual cards really could make a difference.

[Related: 8 benefits of virtual debit and credit cards]

How can virtual cards help me keep track of employee expenses?

Virtual cards make tracking expenses easy in multiple ways. Let’s take a look. 

Empower your team to make purchases

Say goodbye to clunky expense management processes and shared corporate cards. Remove bottlenecks by giving all your employees their own virtual debit card. 

Giving your team a simple way to pay for business expenses will save them time, and ensure no one is left out of pocket. 

Control spending

But how do you prevent employees from overspending? 

That’s easy. You can apply customisable spend controls to each virtual card, so you can control when, where, how much and how often employees spend:

• When employees can spend: Set date ranges for virtual cards so that they automatically close on a certain date. 

• Where employees can spend: Choose the specific merchants or merchant types where employees can make purchases.

• How much employees can spend: Place spending limits for each virtual card that cap spending at your desired amount. You can set spending limits for the card overall or reset them on a recurring basis, such as every day, week, month or year.

• How often employees can spend: Limit the number of times employees can use a card. Or you might make it a single-use card that automatically closes after one purchase.

Controls like these significantly reduce inappropriate expenses. And that makes it much easier to keep business expenses in check.

[Related: Three ways to secure your business from employee expense fraud]

Gain better oversight and simplify reconciliation

When employees share a single physical card, it’s hard to know who’s made which purchases, making it difficult to keep tabs on individual spending. This also makes reconciliation a hassle, as your finance team will need to manually catagorise expenses in your chart of accounts.  

Virtual cards with in-built expense management help you fix this issue. 

You can assign cards (and thus track spending) for specific employees, vendors or projects. Employees can snap and upload receipts and catagorise expenses on the go.  And that makes reconciling expenses easy — no tracking people down to ask about charges necessary. Simply check your account for real-time spending insights. 

Airwallex virtual cards sync hourly with Xero ensuring your accounts are always up to date.

[Related: The pain-free guide to employee expense management]

What if I need to pay for expenses abroad?

International payments are an unavoidable part of doing business in today’s global economy. 

Unfortunately, international transaction fees average 3% for physical debit and credit cards. And those fees quickly eat into your profit margins.

Virtual cards typically charge much lower fees, making them a much better option for businesses that regularly send international payments. Some virtual cards — like those from Airwallex — charge no transaction fees at all, at home or abroad.

Airwallex cards are multi-currency, meaning you can hold up to 24 currencies in your current account and spend globally whilst avoiding FX fees.

[Related: The benefits of virtual debit and credit cards]

Manage team expenses with Airwallex

Ready to ditch your clunky, outdated expense systems and switch to virtual cards? Airwallex has you covered.

Sign up free to Airwallex and give your employees an easier, cheaper and more secure way to pay for company expenses.

Rather than wasting hours filling out expense reports, your employees can snap and upload their receipts and catagorise expenses on the go. Airwallex pulls all expense data into your chart of accounts automatically, making life easy for your finance team. Plus with our multi-currency virtual, you can spend globally whilst avoiding FX fees. 

Sign up for free today. Your finance team is sure to thank you — and your budget will, too.