It is projected that in 2026, the total number of virtual credit card transactions will be a whopping $6.8 trillion. This shouldn't be surprising, though. The world is changing and so is the way we conduct business. For a long time, businesses have relied on traditional credit cards to carry out transactions. Although it has been helpful, it is limited when it comes to online businesses.
To be relevant in today’s fast-growing business world, you need to use the easiest methods of payment, and virtual credit cards belong to this category. Due to the nature of your business, you will need to make a lot of online transactions. Virtual credit cards are fast and easy and they make your transactions seamless.
In this article, you will discover vital details about virtual credit cards and the benefits of using virtual credit cards for your marketing agency.
What is a Virtual Credit Card?
A virtual credit card is a set of 16 digits randomly generated together with a CVV (Card Verification Value) code that you can use to make purchases of goods and services online. Just as the name suggests, you can only make transactions with a virtual credit card online or by telephone.
A virtual credit card masks your original credit card information with the randomly generated credit card number, thus improving your credit account security. Like all credit cards, successful transactions completed with virtual credit cards are included in the revolving lines of credit of your underlying cards and may be charged interest.
Who Can Own Virtual Credit Cards?
Generally, both primary and non-credit cardholders can own virtual credit cards. Primary cardholders can get a virtual credit card for free and without paperwork. Likewise, a virtual credit card may be available to a non-credit cardholder on their existing debit account. The business can choose a selected amount from their bank balance to transfer directly into the virtual cards as needed.
How Do Virtual Credit Cards Work?
Virtual credit cards work exactly like your physical bank cards. However, just as the name suggests, a virtual credit card lives in your digital wallet on the internet, unlike the physical credit card that you can reach for in your physical purse.
Once you request a virtual credit card through your online account with your bank, you'll get a randomly generated card number, expiry date, and CVV code linked to your existing bank account. When you use your virtual credit card to make payments online, you'll see the transaction details on your bank account statement as if you had used your actual card information.
When you use your virtual credit card, no one can trace the virtual numbers back to your actual credit card. This is because they are temporary numbers linked to your actual credit card.
Moreover, a virtual credit card is generally intended for single use. So, even if a company you've done business with falls victim to a data breach and your card information is retrieved, they would not be able to compromise your actual account.
5 Benefits of Virtual Credit Cards
Here are great reasons virtual credit cards are an excellent choice for your marketing agency.
They increase security and fraud protection
Fraud is a significant issue for businesses, especially marketing agencies that handle many online transactions. In 2020, credit card fraud resulted in an estimated loss of about $11 billion according to Julie Conroy, a research director. What's more, eCommerce merchants will likely lose an estimated $25 billion in 2024 to online payment fraud — an increase from the estimated $11 billion recorded in 2020.
If your marketing agency issues a traditional physical payment card to employees who then use those cards to settle countless transactions, you may have a huge potential for security breaches and fraud.
For example, if your employee's physical payment card gets stolen or hacked, the culprit can have undiluted access to your company's funds. Furthermore, recovering the account can be very tiring and usually involves a lot of lengthy processes, such as canceling the card, reissuing a new card to every employee, and updating a new payment detail for all your vendors and services.
Thankfully, virtual credit cards reduce the probability of frauds like this. They create an extra layer of security for anyone making an online payment by generating a temporary card number for each transaction made, protecting the owner’s real account information.
Virtual credit cards are secured by encryption, thus protecting your business from credit card fraud and offering you a safe and convenient way to manage transactions online and in-store.
So, if a hacker gets hold of your employee's virtual credit card information, for example, you can easily cancel the virtual card. When you do this, you won’t need to close your entire account like you would with a physical credit card. You can acquire a new one almost immediately.
The affected employee can then update the payment details for just the services and vendors they're responsible for. This process is easy and won't affect your other staff members or pending payments for vendors and services.
They simplify payment and improve customer relationship
Traditional payment methods are quite tiresome and often lead to delays. For example, just to submit a business invoice, you could go through a lengthy procurement process, paper checks, mailing, and then physically receiving and depositing the funds.
Such administrative delay can damage your business's reputation with your vendors and suppliers. Virtual payment is simpler and faster and will save time and resources. It is available round the clock and offers a broader capability to pay vendors immediately.
Using your virtual credit cards to manage your virtual payments doesn't require long onboarding workflows. It is also very convenient as several online payment platforms for small businesses accept virtual cards as a mode of payment.
They offer better financial management processes
Managing the financial aspect of your marketing agency with traditional cards could be quite frustrating. On the one hand, there are complications and unnecessary hassles associated with financial reconciliation and accounting because employees share the same online payment card. On the other hand, issuing your employees individual payment cards, which sounds like a great idea, is a costly and inefficient process.
Fortunately, virtual credit cards make this whole process much easier, as businesses can create and control their credit cards online. Since virtual credit cards are digital, they eliminate the costs associated with issuing, mailing, and maintaining traditional cards.
Employees can also start operating their virtual payment cards as soon as they receive them. However, you could simplify your accounting and reconciliation process by generating separate virtual cards for each purchase, vendor, team, or service.
You can further customize strategic payment limits and expiration dates for each virtual account number, thus allowing you to safeguard against spend violations and unnecessary purchases.
They give access to data analytics to improve business performance
One note-worthy element of virtual credit cards is the in-built live reporting feature. Payments made through virtual credit cards can generate solid data that, when run in the in-built reporting feature, can help you gain significant insight into your business operations.
This means that your finance team can easily see what funds are available, what is allocated, and what has been disbursed. Everything is tracked in real-time, thus eliminating the need for those tiresome spreadsheets and document sorting.
It doesn't stop there, however. Information received from data analytics can help your marketing agency do so much more. With data analytics, your marketing agency can easily locate markets with a high potential of closing a successful deal.
In addition, you can quickly figure out the most profitable industries, regions, and demographics, which will help you prioritize spending for customers with the highest ROI while reducing costs.
They boost financial transparency and accountability
Since you can assign virtual credit cards to specific vendors, suppliers, and employees, you can know for certain every little detail about your money. Any transactions made on the virtual cards you assign will show up in your payment system for review.
Additionally, employees won't be able to make card purchases without receiving authorization from the appropriate quarters. They can also drill down into their transaction details and view their card balance to stay on top of their spending.
Likewise, in case of issues like declined cards, suspended or canceled cards, and threshold limits, the virtual card company notifies both the employees and their businesses, thus making business payment easy, organized, and streamlined.
Each payment is allocated to the employee who made the purchase, thus making tracking down and reconciling transactions simple. This way, your marketing agency can also focus on other essential business aspects rather than tirelessly chasing down receipts.
Start Using Virtual Credit Cards for Your Marketing Agency Today
Virtual credit cards were initially unavailable for small and medium-sized businesses and enterprises. However, with recent technological advances, virtual payment has become easily accessible to everyday businesses, irrespective of their size. Once you set up your account, you can quickly create as many virtual credit cards as necessary for your marketing agency.
With carefully managed virtual credit cards that are generally safe and easy to use, you can achieve your business bottom line while ultimately saving time and money.