As your business expands, you need to stay attuned to the future. Within the realm of business finances, this translates to reassessing the way you make and manage payments and the tools you use to do so. If you still rely on traditional physical credit cards, checks, or ACH payments — there’s a better way. 

With the rise of online transactions and the increasing need for secure payment methods, the business virtual credit card has become indispensable for companies of all sizes. More than just a payment method, virtual cards are a strategic asset for businesses seeking to streamline expense management and establish an overarching spend management strategy. 

But what is a virtual credit card, and how does it differ from a traditional physical card?

Whether you're a startup exploring new payment methods or a well-established corporation looking to streamline processes, understanding the power of virtual credit cards is essential for the future of your business. 

In this guide, I’ll delve into the mechanics, benefits, and best practices of using virtual credit cards for business. 

Let's get started. 

What is a virtual credit card?

A business virtual credit card is a digital version of a traditional corporate credit card. Each virtual card consists of a unique 16-digit number, security code, and expiration date, and although they’re typically associated with your main credit card account, they stand alone in their functionality. 

Virtual cards were initially created to enhance security around payments since they safeguard real account information and protect against data breaches and fraud. However, the benefits of virtual credit cards have since expanded beyond just security. Today, virtual cards offer businesses a comprehensive suite of helpful features, from real-time expense tracking to on-demand payments.

You can use virtual cards for one-time or recurring payments and easily deactivate or modify them to fit your company's needs. This adaptability makes them a preferred choice for businesses looking to modernize their payment processes without overhauling their existing financial infrastructure.

How do virtual credit cards work? 

Diving deeper into the mechanics of virtual credit cards, it's essential to understand their operational framework. How do these digital tools function in the vast ecosystem of business finances? Well, much like their traditional counterparts. 

You can use virtual cards for various transactions, whether you make them online, in-app, on file, and, depending on your issuer, in person via mobile wallets. Through a virtual card app, which you can use via your desktop or mobile device, you can create and distribute as many virtual cards as you need in a matter of minutes. 

This means you can instantly equip your team with a payment method when they need one and gain even more control while doing so — thanks to spend limits and custom expiration dates. 

For instance, let’s say your team needs to charge various expenses for an upcoming project. Simply create a virtual card with a precise spending limit and a set duration, and distribute it in seconds. Once the project wraps up, you can easily deactivate the card, ensuring no unexpected charges crop up. 

Every transaction you or your team makes with a virtual credit card is logged in real-time, giving you an immediate snapshot of your expenses. This instant tracking keeps you updated and helps you spot any irregularities or potential fraud. Notice something off? You can take immediate action, showcasing the proactive nature of virtual cards. 

Why should you use virtual credit cards for business? 

Embracing virtual credit cards in your business is not only about transitioning to a more effective payment method; it's a strategic move to future-proof your financial operations. As industries become more interconnected, the demands for swift, transparent, and secure transactions will grow, and agility and adaptability will be even more critical. With virtual credit cards, you can instantly gain the security, flexibility, control, and real-time insights to navigate the complexities of payments.

6 Benefits of using business virtual credit cards 

Beyond serving as a modern payment method, virtual cards for business offer many advantages that allow you to get more out of your business credit card, enhance security, and provide unparalleled control over transactions. 

Enhanced security 

One of the primary reasons businesses gravitate toward virtual cards is the enhanced security they bring to the table. Each virtual card has its own unique card number, and you can use it for specific transactions, contractors, or employees. So if a virtual card number is compromised, you don’t need to worry about jeopardizing your entire credit line. Simply deactivate the virtual card and create a new one, rather than having to close down your entire credit card account and start from scratch. 

Simplified vendor management

Navigating vendor payments can be a hassle for any business, and let’s not talk about the pain of having to update cards on file with Every. Single. Vendor. That’s the drawback of traditional payment methods; they may work, but they’re also cumbersome and time-consuming. With virtual cards, vendor management becomes notably simpler. You can tailor each virtual card for a specific vendor, ensuring precise payment amounts and schedules. This reduces the risk of overpayments or missed transactions and provides a clear audit trail for every vendor interaction. By using virtual cards, you can instantly centralize and streamline payments while gaining a more efficient and transparent approach to vendor management.

Increased control over expenses 

With the ability to set custom expiration dates and specific spending limits on each card, you can ensure employees adhere to budgets and spending policies. With real-time tracking, you can also gain immediate oversight of all transactions, making it easier to spot and address any discrepancies and keep a tight grip on expenses. Not to mention, with a clear view of where and how company funds are spent 24/7, you can proactively manage and optimize tedious yet necessary finance processes, like expense management and reconciliation. 

Improved flexibility and convenience

Gone are the days of waiting for plastic cards to arrive in the mail or the logistical challenges of distributing physical cards to team members. With virtual cards, everything is instantaneous. Need a card for a new vendor or employee? Generate it in seconds. Concerned about a specific transaction? Deactivate the card immediately and create a new one. The digital nature of virtual cards ensures that your business can respond to financial needs promptly, making the entire payment process more streamlined and efficient.

Cost savings

Ditching your plastic and using virtual cards will also translate to tangible savings for your business. 

Virtual cards help you do this in a couple of ways. First, with spending limits, which ensure your business stays within budget and eliminates unexpected overspending. Second, with real-time tracking, since you can easily spot suspicious transactions or fraud and instantly deactivate a card, safeguarding your funds from further unauthorized charges. Third, with streamlined vendor management, which puts you in a better position to negotiate favorable terms and discounts, ensuring you only pay what's necessary. And lastly, think about the hours you'd save on manual reconciliation thanks to the clear transaction trails. That's not just time saved; it's money saved from reduced labor and minimized errors.

Faster processing

Let’s face it, waiting days for transactions to clear can be a hindrance, especially when paying vendors or freelancers. Unlike traditional payment methods that can be bogged down by longer processing times, virtual cards offer near-instant transaction approvals. Whether you're settling an invoice or making a purchase, the speed of virtual cards ensures you don't miss a beat. This swiftness not only enhances your business's agility but also strengthens vendor relationships, as payments are received promptly. By reducing the waiting period associated with payments, you're ultimately boosting your business' productivity and financial fluidity. 

Best practices to manage business virtual credit cards

Learning how to use virtual credit cards is only the beginning. Follow these best practices to maximize their benefits and seamlessly integrate them into your business operations. 

Develop a clear policy 

First, define who can create, request, and approve virtual cards. Whether it's only executive management, specific departments, or every team member within a budget, clarity is vital. Next, set spending limits based on roles or project needs to ensure your business stays within budget. It's also essential to outline the approval process for exceptions to these limits. Incorporate guidelines on when and how to use virtual cards for recurring payments, one-time transactions, or vendor-specific purchases. By doing so, you not only enhance security but also ensure that all team members are on the same page, reducing the risk of unauthorized or fraudulent transactions. Remember, a well-defined policy is the foundation of effective virtual card management, ensuring you reap all the benefits.

Use a centralized platform 

Consider your current and future business needs when choosing a virtual card provider. A good virtual card provider will offer a centralized dashboard that integrates with your existing financial infrastructure, including ERPs, CRMs, and accounting systems. This interoperability ensures you can work seamlessly between platforms without compromising visibility into your expenses. Moreover, it minimizes manual data entry errors and enhances security by enabling quick card modifications. With all virtual card activities consolidated on a single platform, you not only streamline your operations but also foster a more transparent and efficient financial environment. This holistic approach ensures that your business remains agile, making informed financial decisions with ease and precision.

Train employees 

A good virtual card provider will equip you with educational resources and dedicated customer support to help employees grasp the ins and outs of the platform, from generating virtual cards to setting spending limits and monitoring transactions. But if you want to take it a step further, consider organizing in-house training sessions to delve deeper into the nuances of your company's specific virtual card usage and policies. This can also be a good time to review virtual cards' security advantages, such as their role in safeguarding against data breaches and fraud. When employees understand virtual cards' inherent value and safety, they’ll be more inclined to use them responsibly and effectively. Make sure to encourage open communication throughout this learning phase and establish a feedback mechanism where team members can voice their experiences, challenges, or suggestions. This not only aids in promptly addressing concerns but also in refining your company's approach to virtual card management. After all, well-informed employees act as a robust line of defense against potential financial discrepancies and unauthorized transactions.

Implement spending controls

Begin by analyzing your company's past spending patterns, identifying areas where overspending is common, and setting limits that align with your budgetary goals. Then, leverage spending limits when issuing virtual cards. However, if you need to administer funds within various projects, departments, or campaigns, create a pre-determined budget where your team can create, distribute, and use multiple virtual cards accordingly. This not only keeps expenses within your company's budget but also provides a clear audit trail, simplifying reconciliation. When assigning virtual cards to employees, consider their roles and responsibilities. For instance, a team member procuring office supplies might have a different spending limit than someone handling multiple marketing campaigns.

Regularly monitor expenses 

With the advanced features of virtual cards, you're equipped with real-time insights, but it's essential to actively leverage these tools to stay on top of payments. Make sure to consistently pull and review reports to get a clear view of monthly spending, identify trends, spot anomalies, and make data-driven decisions to optimize your budget. Regular oversight helps prevent unauthorized or fraudulent transactions and ensures that your spend management strategy aligns with your business goals. Remember, the power of virtual cards isn't just in their use but in the strategic insights they provide, enabling you to drive financial efficiency and growth.

How to get virtual credit cards with Extend 

Staying attuned to the future of finance means embracing tools that redefine how you make business payments. If you're ready to move beyond traditional payment methods and harness the power of virtual credit cards for business, there's no better time than now. 

Learn more about the virtual card features you can instantly start benefiting from, or if you’re ready to get started, we’re here to help!

At Extend, we believe in enhancing, not reinventing, how businesses pay. 

We know businesses don’t want to start from the ground up; they simply want to do more with what they already have. But to achieve this, companies need access to the right tools to streamline payments.

That’s why we partner with the banks businesses already know and trust to instantly help customers access a smarter, more efficient method of managing company spend. 

Central to this strategy are virtual cards, which are digital counterparts of traditional physical cards, extending the capabilities of a company's existing credit card while providing better spend management. Virtual cards have typically been viewed as a single-use product for specific purchases and online security –- often used only by the largest of companies. 

But at Extend, we’ve leveled the playing field and now bring virtual cards to businesses of all sizes. 

We’ve turned virtual cards into a dynamic payment platform, functioning as digital versions of a supplementary card but with a vast array of controls and features. 

Today, thousands of small to medium-sized businesses trust Extend to turn their existing corporate card into a spend management platform through the power of virtual cards. 

‍
As one of our customers, the controller at Donovan Agency, put it,

“With Extend, we’re getting flexibility over how we can use our company credit card. Creating virtual cards is really simple, and we can use them for everything from office supplies and production costs to managing our clients’ campaign spend by platform.”

Whether it be to manage media budgets or streamline employee expenses, there are many ways our customers use virtual cards in their business. 

1. Pass-through and bill-backs 

Businesses using Extend bring a new level of efficiency to pass-through and bill-back expenses, streamlining expense tracking and reconciliation. 

Instead of handling payments with a couple of physical cards, which often leads to a time-consuming reconciliation process, assigning individual virtual cards to each project and client account ensures every dollar spent is accounted for and attributed to the appropriate source.

With this clear separation and categorization of expenses, it’s easier to see who spent what in real-time rather than combing through credit card statements at month’s end to determine which charge belongs to which project or account. 

Moreover, businesses not only streamline a manual and error-prone reconciliation process but also enhance transparency and accountability. Since every transaction is recorded in real-time and can be tagged with expense codes, finance teams gain an up-to-date financial picture to ensure clients are billed back correctly and quickly, fostering trust and reliability in business relationships.

2. Multi-location businesses and franchisees 

Maintaining oversight and control over purchasing across various locations and franchises while ensuring compliance can be daunting. For that reason, more multi-location businesses are using virtual cards to budget and delegate purchasing power while maintaining total oversight and control. 

Companies using Extend can easily do this by creating and allocating budgets to location managers, who can then create and issue virtual cards for each location's purchasing needs within that budget. This approach eliminates card-sharing and allows location managers to manage day-to-day expenses while ensuring spending remains aligned with the company's policies.

The strength of virtual cards lies in the unparalleled control and visibility they provide to the business. Every transaction made with a virtual card is tracked and recorded, offering a transparent and detailed view of expenditures across all locations. This level of detail is invaluable for effective financial planning and budgeting. It enables owners to dissect spending patterns, uncover potential areas for cost-saving, and allocate resources more strategically.

3. Contractors and temporary employees 

Virtual cards offer a more efficient solution for covering contractors' and temporary employees' work-related expenses compared to traditional methods like checks or ACH. While these conventional methods work, they often lead to delayed reimbursements, creating inefficiencies and potentially straining working relationships.

Instead of having contractors submit their out-of-pocket expenses via an invoice, businesses can issue virtual cards to them directly. This approach ensures that contractors and temporary employees can immediately cover necessary work-related costs, from supplies to tools, without fronting their own money.

Virtual cards also bring significant operational advantages thanks to their immediacy and flexibility. Businesses can reduce cash reimbursements, streamline financial operations, and enhance the spend-tracking process. Not to mention, businesses accrue even more rewards from these transactions, a benefit they would otherwise miss by paying with traditional methods. 

4. Vendor payments 

Businesses are increasingly turning to virtual cards for vendor payments due to their enhanced safety and efficiency. Unlike traditional payment methods, virtual cards offer stringent security controls, like spending limits and custom expiration dates, which reduce risks like wrongful billing and fraud.

Moreover, they eliminate the need to share a single physical card with multiple vendors, which is risky business. Especially since fraud and data breaches are more common than ever, with global losses predicted to grow to almost $50 billion by 2030.

Creating a unique virtual card for each vendor is a much more convenient and secure approach to protecting real account information and credit lines. If vendor-related fraud ever occurs, businesses can simply deactivate that one virtual card and create a new one, rather than having to close down their entire credit card and update card numbers with every single vendor — a tedious and disruptive process for business operations. 

5. Employee expenses 

Virtual cards offer a flexible and accountable way for businesses to manage employee expenses more effectively. This use case is particularly important since not every employee has access to a company card, leaving many fronting the bill and submitting expense reports for reimbursement. 

Worse yet, if employees aren't using personal credit cards, they're likely sharing company card numbers, which can lead to unauthorized charges and a lack of accountability. Such practices not only affect employee morale but burden finance teams with a retroactive process that depletes time and energy that could instead be devoted to more strategic tasks. 

With Extend, business leaders can use virtual cards to empower their teams and efficiently distribute funds across the organization without sacrificing control or visibility over expenses. Employees can also request virtual cards, reducing unapproved spending and enhancing accountability. 

This approach simplifies expense management, receipt management, and out-of-pocket expenses, if any, and allows finance teams to create pre-determined budgets to delegate spending power while retaining comprehensive oversight.

6. Subscription costs 

Managing subscription payments often involves sharing one or a few corporate cards across various departments. A process that ultimately exposes credit card numbers and forces teams to leave cards on file with multiple providers. 

While common, this method can lead to several challenges, from security breaches to difficulty in tracking which charges belong to which department, diminishing internal accountability and control. Instead, finance teams can create a recurring virtual card for each provider to drastically reduce the risk of credit line exposure and gain a clear view of expenses. 

This method ensures every subscription expense is linked to a distinct virtual card that automatically renews every month, simplifying the process of paying, identifying, and managing these costs across the organization. 

If an employee leaves without canceling a subscription, deactivating their specific virtual card is a simple task. 

7. Suppliers and wholesalers 

Dealing with wholesalers and suppliers means businesses face the same risks associated with using the same credit card for multiple transactions. This practice risks a business's entire credit line, and if fraud occurs, canceling and reissuing cards and updating all relevant vendor details will take valuable time and stall business operations.

Assigning individual virtual cards with set limits to each vendor is a better approach to eliminating risks and limiting potential fraudulent activity to a single virtual card rather than the entire credit line. In case of fraud, businesses can quickly cancel the affected virtual card in just a few minutes compared to the lengthy ordeal with traditional credit cards.

Leveraging virtual cards empowers businesses to maintain business continuity, ensure smoother interactions with suppliers and wholesalers, and benefit from a safer, more controlled, and more efficient way to handle these crucial business relationships.

8. Travel expenses 

Everyone benefits when virtual cards are used for business travel: the company, its finance team, employees, interns, and even interviewees. 

The reality is many employees can’t afford to front business costs on behalf of a company and wait for reimbursement. Given that travel expenses can be substantial and accrue interest, this places a significant financial burden on staff, interns, and interviewees. 

Meanwhile, finance teams are left with a cumbersome reimbursement process and a lack of real-time spending visibility. Finance teams that implement virtual cards for better spend management can easily manage and monitor travel spending as it occurs, while employees get an instant and reliable way to cover travel-related costs like flight bookings, accommodations, and meals.

The same applies to interviewees, who can also use a virtual card to take care of travel costs and an allotted per diem when interviewing for a position, giving them a stellar interview experience and leaving a positive impression of the company. Moreover, with spending limits and restrictions on virtual cards, teams can rest assured travel expenses will adhere to company policies, reducing the risk of overspending and simplifying compliance. 

9. Tail spend 

Virtual cards provide a practical way to track miscellaneous spending and cash flow in real-time. Each purchase is automatically recorded, providing up-to-date financial data and enabling businesses to adjust their spending as needed throughout the month, rather than waiting for month-end reviews. 

This level of detail is crucial for identifying areas where cost savings can be made and ensuring that even minor expenses align with the company’s broader financial strategies.

Businesses using virtual cards for tail spend not only benefit from a streamlined expense tracking process but also from significant savings. According to recent data, firms that use digital tools to manage tail spend can cut their annual expenditures by 5% to 10%, on average.

Get started with Extend 

Experience Extend's spend management platform for yourself and see the impact it can have on a business’s efficiency and financial control.

The payment industry has undergone a digital transformation in the last couple of years, and while this evolution has opened doors to new opportunities, it has also increased security risks. 

As more businesses operate online, the potential risks – from data breaches to financial fraud – become increasingly more complex and sophisticated. 

Research shows that North American fraud rates in 2023 – including attempted and successful incidents – increased by 70%, compared to 59% in 2022.

Hence, securing financial transactions is necessary in today’s digital-first environment. 

But where should you start?

A great first step is to adopt virtual cards as your preferred payment method.

What are virtual credit cards? 

Virtual credit cards are exactly what they sound like: credit cards that exist solely in digital form. They work just like traditional credit cards, holding a unique card number, validity date, and security code.

They’re created from your existing corporate card and via the virtual card platform you decide to use. As with a traditional credit card, you can use a virtual card to make purchases online, over the phone, and in person by loading them into your mobile wallet for contactless payments. 

What sets virtual cards apart from their physical counterparts is that virtual cards exist strictly in the digital realm, making them more secure and customizable.

How virtual credit cards enhance security and control over transactions 

Virtual credit cards bring unprecedented security and control over financial transactions, among other benefits, for businesses looking to streamline their spend management. This manifests in several key areas, allowing your business to navigate its finances with greater precision and security.

Unique card numbers 

Whenever you use a virtual card, you generate a unique credit card number. You can use this number to pay for a one-time transaction or other specific uses by assigning it to an employee, vendor, or client account for recurring payments. Relying on unique card numbers rather than one single number from your physical card is the best option for securing and controlling business expenses. Doing so eliminates the need to share physical card numbers across your organization and reduces the risk of card theft, cloning, or misuse. If a virtual card number is compromised, its impact is limited to that specific transaction or card, allowing you to quickly deactivate it and prevent widespread fraud.

Spending limits and expiration dates 

Another great advantage of virtual credit cards is the ease of setting and adjusting spending limits and expiration dates per card. Not only is this great for securing transactions, but this functionality ensures expenses remain within the allocated budget while maintaining financial discipline across departments and projects. It also guards against unauthorized charges or misuse. Adjusting these settings in response to changing economic situations or unexpected needs enhances your control and responsiveness in financial management.

Real-time transaction monitoring

Maintaining visibility is crucial when managing expenses to control cash flow and catch any potential unauthorized charges in time. Relying on month-end reports can be challenging for finance teams as funds have already been spent. Virtual cards transform this process into a proactive approach. They offer real-time visibility into company spending, ensuring you're always informed about where and how funds are used. This level of visibility is invaluable for effective budgeting, making timely financial decisions and analyses, quickly identifying discrepancies, and aligning every transaction with the company’s financial strategy and objectives.

Better expense management 

To simplify expense management, you need clarity and control, often lost in traditional methods where employees face costs and seek reimbursements. Instead of forcing employees to front the bill, use virtual cards. Employees can access an immediate payment method when needed, while finance teams retain complete oversight and control. This approach reduces the need for employees to pay out-of-pocket and streamlines expense reporting, freeing finance teams from the burdens of a cumbersome reimbursement process. 

Case study: A business success story

Let's look at how virtual cards can protect payments in real life through the lens of one of our customers, an electronic online retailer and wholesaler.

Before using Extend and virtual cards to manage transactions, the online retailer used one corporate card to manage inventory purchases for more than 200 vendors. Leaving the same card on file with every vendor proved to be a challenge since they experienced fraudulent charges at least once or twice a year, “an eight-month-long nightmare,” as the retailer’s business manager put it. 

Fortunately, they found Extend. 

After registering their existing corporate card, the retailer started creating new virtual cards in a matter of minutes. Fast forward to today: they create a unique virtual card for every vendor, meaning they never have to leave their primary card on file again, protecting them from exposing their primary account information. 

The results have been transformative. 

Not only were they able to reduce fraud hassles, but they prevented wrongful billing by setting exact spending limits on each card, and increased oversight when reconciling charges with original orders. 

Added bonus? They can continue to earn rewards for every transaction from their preferred card program.

Want to experience a similar success story? 

Leverage virtual cards for enhanced security in your business

Shifting to virtual credit cards is a strategic move to ensure safety and control over your company's financial transactions. 

From preventing fraud and overspending to increasing security, virtual cards are simply a better choice for today’s fast-paced and digital-first environment.

Learn more about how to implement virtual cards in your business.