Blog Posts

January 29, 2021

How Virtual Cards Work For Business

Carla McMorris
Director of Content

Whether it be debit or credit, we’ve all used cards as a vital means of transacting payments in person or online. Over 70% of Americans have credit cards, with 34% in possession of three or more different card brands. 


Cards have become a staple since the ‘Charg-It’ system (developed in 1946), radicalized the way in which consumers and businesses alike paid for goods and services.


Yet, with technology reaching expansive new heights and with a pandemic restricting a vast majority of purchases to online formats - the demand for physical cards and virtual cards has become essential.


How do virtual cards work?

Virtual cards are digitized cards that allow businesses and consumers to transact easily. A virtual credit or debit card is a 16-digit random number with a CVV code that can be used to pay for goods, services, and subscriptions online. Virtual cards make it possible to transact with your debit or credit card number without actually using that account number. Virtual cards thwart hackers because the card number cannot be traced back to the original credit card number or debit account. It’s possible to assign an expiration date and a spending limit to a card to further its fraud resilience. 


Companies like Apple and Google, have begun to provide their own payment services. They utilize the details from physical cards stored on phones and apply them in a digital format for convenient use in the event a customer doesn’t have their physical card at hand. These digital wallets are helping to establish virtual cards as more mainstream. 


What are the business benefits of virtual cards?

Because virtual cards are digital, businesses have a lot more insight and control over every purchase. Using virtual cards to manage business subscriptions, employee expenses, or recurring fees? Allocate a virtual card to each vendor and manage them in real-time. Virtual cards are also more secure, preventing fraud by having one virtual card number allocated to each expense instead of one card for every expense. In addition, virtual cards can help businesses limit or control spending because you can restrict how much a virtual card can be charged and when it can be used. 

 Are Virtual Cards Safe to Use?

Virtual cards are safer to use than the plastic cards in your wallet because virtual card numbers cannot be traced back to the original card or account number. Virtual cards were designed for online purchases, but they can be used over the phone or in-store if the store can manually input a card number. 


What is a ‘White Label’ card?

A white label card, or a private label card, is one that retailers and companies use to brand their own credit or debit cards. Card issuers offer white label cards to companies who want to provide physical or virtual cards in their name. 


Some Fintech platforms are powering companies to issue branded physical and virtual cards for their customers. Companies who want to offer their customers the advantages of credit or debit cards and the conveniences of virtual cards, work with Fintech companies like Synapse to customize programs to their business’s needs. 

Taking the next step

More and more companies are using virtual cards to pay for one-time and recurring purchases, boosting efficiency and fraud prevention. Some companies are working with Fintechs to launch card programs for their customer’s convenience as well.


With the ever-growing usage of e-commerce and the staggering 44% of all American online purchases relying on digital wallets and virtual card processing, the tide is only building for virtual cards and the Fintechs that help companies leverage them.

Sources

How Virtual Cards Work For Business

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Carla McMorris
January 29, 2021

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