According to PRNewswire.com, virtual card payments make up 50% of all B2B payments. Suppliers are accepting virtual card payments now more than ever before, but many still rely on outdated payment methods because they believe the fees don’t outweigh the benefits. Despite the most common objections for refusing to accept card payments, virtual cards offer clear benefits suppliers simply can’t ignore.
Better cash flow
Many suppliers that accept credit cards have already built their pricing structure around the fees evaluated on these types of payments. Physical credit cards and virtual credit cards, or v-cards, work the same way. The only differences being virtual credit cards are delivered to suppliers via email and contain a randomly-generated, temporary credit card number unique to each payment. Making the decision to accept virtual cards can have a significant impact on a supplier’s cash flow. In most cases, virtual cards can be issued immediately which means suppliers get paid sooner and have to make fewer calls about lost checks and late payments. Suppliers that accept virtual cards on behalf of their buyers might also enjoy the added benefit of becoming a preferred vendor. Preferred vendors are the first choice when a new need arises within the organization.
A safer payment process
According to a recent J.P. Morgan survey report, 62% of companies were targets of payment fraud in 2014, with the most targeted method being checks, credit/debit cards and wires. And it’s not just buyers who have to worry about fraud either. Suppliers suspected of fraud face reputational and financial risks that can have lasting impacts on their business. When sharing payment information with a supplier, fraud can occur one of three ways: suppliers can inadvertently pass information along to fraudsters, employees of the supplier can steal information or a third party can intercept information as it’s being transferred to the supplier. Virtual cards create a buffer between this information and suppliers. When a virtual card is used, the full credit card number is never shared with the supplier and the card is voided immediately after use. Additional features like setting an early expiration date and limitation on the amount to be charged further protect suppliers against fraud while giving buyers added peace of mind.
Stress-free accounts receivable
Accepting virtual card payments equates to processing fees, but did you know other payment methods such as checks cost suppliers fees, too? Receiving and processing paper checks is labor intensive, costly and error-prone. Virtual cards eliminate dealing with paper checks and bank check processing fees. They also provide detailed remittance data that can be easily sent to the supplier’s ERP system, saving accounts receivable countless hours of manual data entry.
The right strategy executed properly benefits buyers and suppliers. Not only do virtual card payments provide real benefits to suppliers, they improve cash flow, create a safer payment process and simplify accounts receivable.