Did you know that between 2022 and 2027, the virtual card market is expected to soar by 280%, growing from $2.4 trillion to a staggering $9.1 trillion? This is a testament to how businesses of all sizes are increasingly recognizing the value virtual credit cards bring to the table. 

This is particularly relevant for small business owners and financial managers focused on optimizing financial operations, since the hassle of managing physical cards or grappling with cumbersome expense reports is a time-consuming burden. In contrast, virtual cards offer a more efficient and straightforward approach to effective spend management. 

In this guide, I’ll go over the benefits of virtual credit cards and why you, too, should implement them in your business to remedy some of the finance and accounting challenges often encountered when using physical credit cards. 

But before we dive deep into the benefits, let’s tackle a foundational question: What is a virtual credit card? 

Understanding virtual credit cards 

Virtual credit cards are essentially digital versions of traditional, physical credit cards. But instead of getting a tangible piece of plastic, you get a unique virtual card number, expiration date, and security code. Although virtual cards operate much like standard credit cards, they offer additional layers of security and control, making them particularly beneficial in any business setting.

Virtual cards aren’t a brand-new concept, as they’ve been around for decades, but they have recently gained traction as businesses become more digitized and focused on automating tedious business processes. Initially created as a secure online shopping tool, virtual credit cards have evolved to serve various other purposes. Today, they are increasingly used to facilitate B2B transactions, vendor payments, and expense management.

The great thing about business virtual credit cards is their highly customizable nature. You can tailor virtual cards for specific expenses, vendors, or even employees. Not to mention, you can easily track purchases in real time and set custom spending limits and expiration dates. The benefits of virtual credit cards for business are two-fold: not only do you gain greater control over your business finances, but you also reduce the likelihood of unauthorized and fraudulent activities. 

For instance, consider the following scenario: a vendor needs to process a charge. Rather than disclosing your sensitive physical card information — which could be stored across multiple platforms and become susceptible to hacking — you can generate a single-use virtual card with a predetermined spending limit exclusive to that vendor. Once the payment is processed, the card will automatically deactivate and be rendered useless, minimizing the risk of overcharging or fraud.

The advantages of virtual credit cards for businesses 

Grasping the full utility of virtual credit cards involves recognizing their impact on business operations — making them more secure, efficient, and manageable. Let’s review some of the key benefits that have turned virtual cards into an invaluable tool in modern business financial management.

Enhanced security and fraud protection

One of the most notable benefits of virtual credit cards is the heightened level of security they provide. Unlike traditional credit cards, which are prone to theft and misuse, virtual cards grant you better security and control via a unique card number, which you can also assign to a specific transaction or vendor. This means that even if a hacker gains access to a card number, its usability is often limited or entirely nullified. The ability to deactivate virtual cards instantly adds another layer of security, effectively reducing the risk of unauthorized transactions and fraudulent activity.

Improved expense management

Virtual credit cards significantly streamline the expense management process. Traditional methods often involve manual data entry, paper receipts, and cumbersome approval processes. With virtual cards, everything from issuing to tracking to reconciling can be managed digitally. Expense reports can be significantly reduced by issuing approved virtual cards, and custom rules can be set to automatically categorize and approve certain types of transactions as they occur. Simplifying expense management with virtual credit cards not only saves time but also reduces the chance of human error, making financial reporting and auditing far more straightforward.

Increased control over business spending

The ability to set spending limits on virtual cards gives businesses unparalleled control over their expenditures. You can tailor spending limits for specific vendors, projects, and employees and ensure that spending stays within your allocated budget. This is particularly beneficial for companies that operate across different departments, projects, or locations, allowing for real-time adjustments to be made to control spending effectively.

Flexibility and convenience

Virtual credit cards are versatile and flexible, offering convenience for both online and in-store payments. Moreover, you can easily integrate virtual card payment software with your existing accounting software, further streamlining expense management. The digital nature of virtual cards means you can issue them in seconds, eliminating any waiting period you would experience with a traditional card. This makes them ideal for time-sensitive and ad-hoc purchases as it provides you with the agility to quickly adapt to varying payment situations. 

Addressing common concerns about virtual credit cards 

Virtual cards offer a number of benefits, yet it’s only natural to have some questions or concerns as you consider implementing them in your business. The common questions generally revolve around pricing, vendor acceptance, and usability, and while these are all valid aspects to consider, the advantages of virtual cards substantially outweigh the limitations. 

Let’s go over some of the most common concerns when considering virtual cards for your business. 

Cost implications 

When it comes to the cost, it's important to remember that pricing can vary greatly depending on your credit card issuer and the virtual card vendor you choose. In the case of Extend, there are typically no additional fees if you hold a commercial credit card from one of our partner banks.

Vendor acceptance 

As for vendor acceptance, while some sectors, like hotels and car rentals, may still be warming up to virtual cards, they are already widely accepted by online retailers. The trend is clearly toward broader adoption, especially as more physical stores update their payment systems to accommodate contactless payments via mobile wallets.

Ease of use

Regarding usability, virtual cards are generally easy to use and implement. Especially if you partner with a virtual card payment provider like Extend, which doesn't require you to leave your bank or open new lines of credit. This means that within a few minutes and a quick and intuitive onboarding, you can be on your way to equipping your team with a payment tool whenever they need one. Not to mention, you can also integrate with your existing finance and accounting software for an even smoother and seamless workflow. 

Virtual credit cards and Extend

Virtual cards offer both simplicity and security in managing business transactions, but the key to unlocking their full potential lies in choosing the right provider. If you value the convenience of staying with your current bank and avoiding the hassle of opening new credit lines, consider using Extend. 

Extend's virtual cards are customizable, offering an unparalleled level of control and flexibility. You can create as many single-use or auto-refill cards as you need, set individual spending limits, and customize expiration dates. You can even assign virtual cards to specific employees, vendors, contractors, client accounts, and various company departments or franchise locations. 

These features, coupled with on-demand spend management capabilities like real-time tracking, budget creation, and out-of-pocket expense management, grant you full transparency, visibility, and control over business expenses. You can also integrate Extend with your existing financial infrastructure, further centralizing payments and streamlining expense management. 

If you want to better understand the business impact of a spend management platform such as Extend, consider this success story from one of our customers in the marketing field, JPL. 

Rather than relying on a single corporate card for all paid media transactions across multiple ad platforms, JPL leveraged the power of virtual cards to manage media spend across client accounts. They accomplished this by creating a unique virtual credit card per client, which they easily tailored according to required spend limits and budgets. Doing so not only provided the firm with added visibility and control over payments, but it significantly streamlined accounting processes and reduced the time they spent on monthly reconciliation. 

You, too, can start to leverage the power of virtual cards to manage company spend more effectively. By choosing Extend, you’re not just adopting a better way to pay but gaining a comprehensive approach to a more organized, transparent, and secure financial framework for your business. 

Embracing the future with virtual credit cards

As the business world continues to shift to digital, virtual credit cards offer an efficient way to keep up with both day-to-day operations and long-term financial goals.

If you're ready to enhance your business's financial efficiency and security while streamlining spend management, there’s no better time to get started with virtual cards.