Virtual Cards Moving Deeper Into B2B Payments

Digital transactions are overtaking the B2B universe this year, and with that come concerns about speed and security that attend all such undertakings. It’s casting a spotlight on virtual cards, seen as a highly secure form of payment that is easily integrated for straight-through processing.

PYMNTS’ December 2020 CFO’s Guide to Digitizing B2B Payments, done in collaboration with Comdata, leaps into the deep end, noting that “newer digital payment tools, like virtual cards, offer key advantages to optimizing their business-to-business (B2B) processes during the health crisis. These tools allow corporate buyers to secure payments by generating one-time digital codes for each transaction, and they also deliver funds to vendors more swiftly than putting checks in the mail.”

Features like this and more are inspiring corporate buyers to leverage virtual cards to simplify and secure their payment processes, and vendors are similarly adopting automated solutions that can help them easily receive and process card payments and their associated data.

At The Nexus Of Identity And Spend Control

Commenting on the large-scale push toward virtualization now sweeping the business landscape, Mike Cook, senior partner and head at IBM Payments Center, told PYMNTS that digital IDs will become commonplace and can provide issuers with the metadata to fully vet applicants in ways only possible through digital means.

It all hints at a near-future where trusted ID and B2B payments merge into a new form.

“Now as we go into virtual cards, you’re having to think, ‘I’m going to have to assume that, in my lifetime, I will have a digital lD,’ and the integrity of that ID is, frankly, going to be way stronger than a piece of plastic with a smeared signature,” Cook said.

However unfamiliar with virtualization a firm may be, it’s happening. As more digital innovation comes to B2B payments, virtual cards are finding new and valuable use cases.

“Firms are taking note of virtual cards, but the future of these tools could depend on whether they offer benefits that distinguish them from other emerging digital payment options. Virtual commercial cards stand out because they enable deeper security, provide useful remittance data and make funds more quickly available to recipients than do traditional methods,” per the CFO’s Guide to Digitizing B2B Payments. “Real-time payment systems that deliver near-instant account-to-account (A2A) transfers are now drawing attention — especially from small to mid-sized businesses (SMBs) — because they offer similar advantages.” This uses the ISO 20022 standard to carry transaction data with payments, easing the reconciliation process.

Cross-Border B2B Virtualizing For 2021

Virtual cards are making a splash in cross-border B2B payments, as knowledge of their spend controls, monitoring and analytics reach the ears of more CFOs.

“Cross-border B2B payments can be complex and cumbersome affairs, but virtual cards are helping firms more swiftly and cost-effectively make these international transactions,” per the new Guide. Taking aim at correspondent banking, the Guide notes that “virtual cards can allow corporate buyers to cut out many … intermediary banks. These solutions can enable swift transactions and provide payouts in recipients’ home currencies without foreign exchange fees — assuming that the card network being utilized supports both countries.”

As the December Guide concludes, “Replacing paper check transactions with those that use virtual cards could alleviate many … strains, but vendors first require technological setups that allow them to easily handle the new payment method. Platforms and tools that support automated virtual card processing may ultimately be critical to getting businesses to adopt the technology.”