Virtual cards are not an incredibly new concept. We’ve seen the technology prosper over the last decade as more companies have invested in solutions, including accounts payable automation, that streamline manual processes and improve workflow. Despite their growing popularity, there are a number of misconceptions about virtual cards that may be preventing even greater adoption. Here are five common myths about virtual cards that need debunking.
Myth 1: High Cost
Many companies are reluctant to adopt payment platforms supporting virtual card payments because they believe there will be high financial costs associated with the transition. The reality is, companies actually save money once they make the switch. Traditionally, paper checks have been the preferred method of payment, but there are high processing fees associated with checks plus they require significant manual processing by employees. With virtual credit card payments, those processing fees are eliminated, along with the costs of paper, printing, postage, and mailing. With a single file upload, all supplier payments can be initiated, reducing the amount of time employees spend on one invoice.
Many payment software providers even offer a cash back incentive to companies that use virtual credit cards. The rebate is generally earned through interchange fees on the card transaction – thus the more spend on card, the higher the rebate.
Another way companies are able to save money using virtual cards is through the control they have over employee spending. Administrators on a payment software account can set specific limits with respect to transaction amount, number of transactions, MCC code, and more. When restrictions are placed on transactions, it makes it nearly impossible for employees to overspend or make unapproved purchases.
Myth 2: High Risk
Many companies tend to assume there may be security risks associated with using virtual credit cards. However, this is one of the biggest myths about virtual cards, as one of the major advantages is actually quite the opposite. Virtual cards were developed with security in mind. They actually provide an effective barrier to fraud. The travel industry in particular is quite susceptible to fraud due to the many touch-points that leave your company’s sensitive information, such as plastic purchasing card numbers, exposed. With virtual cards, you no longer have to worry about your details getting in the hands of the wrong person and being hit with a slew of fraudulent charges. A single-use card number, generated for a specific dollar amount, means that even if your card data were to be stolen, hackers wouldn’t be able to use it for other purchases.
Myth 3: Vendor Acceptance
A common misconception about virtual cards is that vendors may not be willing to accept this type of payment. Many organizations are highly skeptical about whether their vendors will accept electronic payments, but the reality is that enrollment numbers are generally higher than most expect. Once vendors are informed and educated about how electronic payments work and the benefits around them, they are typically more than willing to enroll. Virtual cards save vendors time and money, and generally provide them with greater remittance detail than check or standard ACH payments.
Myth 4: Not for Small Businesses
While many large organizations have already reaped the rewards of virtual cards through cost savings, efficiency, and security benefits, small businesses have been slower to adopt the technology. This is largely due to the misconception that they will need to invest an incredible amount of time or resources to implement changes to their processes. Small and mid-sized companies generally have limited IT experts in-house and believe they would need a larger team in order to properly execute the changes.
The fact is, virtual cards are an easily integrated electronic payment alternative for any size business. Thanks to the latest in AP automation technology there is no lengthy implementation process or investment required.
Myth 5: Strain on Company Resources
Regardless of business size, many organizations have hesitated to adopt virtual cards because they believe more staff and company resources would be needed to support the transition. In actuality, virtual card programs are designed to simplify and automate your business operations, reducing the time employees spend on manual data processes. Instead of spending hours reconciling against invoices and employee travel expenses, employees have more time to focus on value-added areas of the business that bring in additional revenue and provide a competitive advantage.
Now that we’ve debunked the most common myths about virtual cards, CSI encourages your business to take advantage of the benefits that electronic payments and automating your accounts payable processes can provide. After a relatively brief implementation period, your employees and your bottom-line will feel the difference.