Until a couple years ago, virtual cards were “virtually” unheard of outside the payment world. Fewer suppliers accepted payments by card, so fewer corporations were motivated to offer virtual payments, despite the benefits.
Now most everyone has at least heard of virtual cards and understands the convenience of paying electronically. When it comes to large-scale supplier payments, however, they still have questions. They’re not quite sure how virtual card payments work on a corporate scale, or whether their business could benefit from using them.
Here’s a quick overview into how virtual cards work and how to determine if they’re a good fit for your organization:
How do virtual cards work?
A virtual card, or v-card, is a digital card with a 16-digit number that uses a payment network such as Mastercard®, Visa® or Discover®. Virtual cards are delivered to your suppliers via email, and can be processed just like any other card payment.
So instead of sending checks through the mail or paying invoices over the phone, you’d have EML handle those payments virtually. We work with your suppliers to get them enrolled in your virtual card program – you securely send us the funds and payment instructions, then we can pay them when you’re ready. We email your supplier a unique 16-digit number that disappears once the payment goes through. That number is never used again, so it’s very secure. You can also pay multiple invoices with one payment, just like you can with a check.
When you have hundreds (or in some cases, thousands) of invoices to pay, the amount of time you can save by paying them with virtual cards really adds up. For example, cable provider WOW! was writing almost 40,000 checks per year. The company’s entire AP staff was devoting one day per week to printing, signing, stamping and mailing paper checks. At companies that pay their suppliers with traditional cards, the labor requirements aren’t much better – an accounts payable staff member has to call the accounts receivable department at the supplier’s company and give them a card number over the phone. That’s a call that can take five or ten minutes, multiplied by however many vendors you need to pay.
Virtual cards also cost less than ACH or checks, provide remittance detail, offer fraud protection and can generate monthly revenue.
Are virtual cards a good solution for my corporation?
Virtual cards sound like a great way to pay your suppliers, right? They are … but not necessarily in every situation. Depending on your organization’s typical spend – who you pay, how often you pay them, your average payment size, and your organization’s capacity to handle its payments – virtual cards may or may not be for you.
To really figure out whether virtual cards are the right choice for your business, contact a member of the EML team. With just a few questions, we’ll be able to determine the best payment strategy for your suppliers. If you’ve already tried virtual cards and they didn’t generate great results, read our list of the top five reasons virtual card programs fail. We’re certain a few of them will sound familiar. Just click on the image below to access the flyer.