Usage of virtual cards grew at breakneck speed in 2016 and is expected to double between 2015 and 2018. Some estimates see virtual card payments growing to over $500 billion by 2024. What is driving this trajectory and is your firm positioned to take advantage of this cost saving resource?
Virtual cards are essentially a one-time use payment system that generates a new account number for each invoice. Unlike a credit card that is used over and over, the virtual card system generates a new account number for each transaction increasing security and efficiency while driving down the cost of accounts payable.
So why are single-use virtual payments taking off now?
- Rebates. Virtual cards offer between .75% and 1.5% cash back on your total AP spend.
- Cost savings. Virtual cards offer substantial savings over paper checks ($9 verses $33 per transaction) and credit card payments eliminating the need for paper, postage and staffing costs to process physical checks and bank fees associated with credit card transactions.
- Enhanced security through single use card numbers. Virtual cards generate a new number for each transaction significantly reducing the opportunity for fraud.
- Greater efficiency that reduces errors and reconciliation issues. Because virtual cards offer greater controls which limit the amount of the transaction, businesses have greater control over the reconciliation process.
- Increased payment times for suppliers. Suppliers can now be paid faster reducing days to be paid and thereby increasing working capital due to the speed of virtual payments.
- Enhanced data capture. Virtual cards offer the ability to include customized data capture fields to tighten controls and improve efficiency.
If you haven’t considered virtual card payments for your organization, Lost and Found is offering complementary supplier match reports to give you an accurate look at which of your vendors are already on the program and what the revenue opportunity is for you.