In the past year, virtual card payments have grown like never before. Predictions for virtual card usage show that this growth is likely to be exponential: According to research from First Annapolis, virtual card payments will double from $83 billion in 2015 to $160 billion in 2018, and explode to over half a trillion by 2024.
When we refer to virtual cards, we are speaking specifically of those that utilize single-use ghost account, or SUGA, technology. At their core, these are essentially a digitally tokenized card number. With a single-use ghost account, a unique number is generated for each virtual card payment. After the payment is made, the single-use number is invalid and cannot be reused.
Why are so many organizations adopting these single-use virtual cards? Here are 5 key reasons:
1. Tight controls that minimize errors and reconciliation issues. Buying organizations can set controls on single-use virtual payments that limit the amount, date, merchant and even MCC codes, among other parameters. For example, if you send a single-use virtual payment to your office supply store, you can specify the exact amount that the merchant must process to receive payment (down to the penny), and you can limit the date range during which that virtual payment is valid.
2. Improved payment and remittance data. With virtual payments, you can choose to include additional information with the payment, such as project codes or cost center info. Plus, this added data can be more robust than with other payment types (for example, ACH limits any added data to 80 characters).
3. Enhanced data capture. In addition to the added data mentioned above, virtual payments also provide the ability to include customized data capture fields. For example, if you’re paying for a hotel expense, you can include a customized data capture field for the booking ID number. Streamlined and simplified reconciliation. Virtual payments include a full audit trail with real-time data analytics.
4. Faster payments for suppliers. Who doesn’t want to get paid faster? Suppliers can reduce days sales outstanding and increase working capital with the speed of virtual payments.
5. Lower costs when compared to plastic cards. Since virtual cards are digital, there are no costs associated with issuing, mailing and maintaining plastic cards.
If you would like to learn more about implementing a virtual card payment system for your organization please contact Jeff Lavoie, VP of Sales at Lost & Found Inc. at 704-662-0074.
Chad Clay is SVP of Client Management at Kontrol Payables, a Lost&Found partner focused on commercial payments solutions.