4 Ways Virtual Credit Cards Benefit Businesses

With businesses increasingly focusing on controlling costs and enforcing spending discipline, one tool that's getting more attention is the virtual credit card.

Sometimes called digital credit cards, virtual credit cards function similarly to physical credit cards everyone is familiar with. The main difference is that there's no physical credit card that can be lost or stolen. Though primarily intended for online purchases, most providers now allow virtual cards to be added to digital wallets such as Apple Pay.

More importantly, however, several functional differences between the two card types make virtual credit cards advantageous for businesses, particularly those that don't want to issue permanent credit cards to all employees. Here's a look at some of them:

Minimize Reimbursement Requests

While a physical card typically cannot be used until it arrives in the mail and is activated by the user, virtual cards are ready for use as soon as they're created. Virtual credit cards can also be created for specific use cases, vendors, transaction amounts, and even transaction counts. They can also be made with short expiration dates.

This makes virtual credit cards useful for allowing employees a way to make business purchases on an as-needed basis while waiting to receive their physical card or if they don't have one issued. This way, employees don't have to use personal funds to cover business expenses and then submit reimbursement requests.

Remove the Need for Credit Card Sharing

One way employees sometimes get around having to use personal cards for business expenses is credit card sharing, either by physically borrowing a card from another employee or having that employee make a purchase on their behalf.

By making it easy for an employee to request (and receive) a virtual credit card, your business removes the need for this practice. Minimizing card sharing reduces the potential for misuse while ensuring that spending is properly attributed to each employee.

Improve Control of Business Travel-Related Expenses

One of the most common reasons why employees must make business purchases is to cover travel-related expenses such as hotels, plane and train tickets, rental cars, taxis and ride shares, and meals.

Since some of these costs are booked in advance (particularly airfare), it can be challenging to see the total cost of sending an employee to a trade show or client site or to calculate the total cost of having a team attend an event.

Virtual cards can be used to make this tracking easier while improving compliance with company spending policy. One card could be used for booking air travel, one for booking hotels and rental cars, and a third for Uber rides and meal expenses (provided your virtual card provider allows them to be added to a digital wallet). All would have spending limits that match your company's spending policy. If your company provides a per diem rate, virtual cards can be provided to employees that are capped at the matching daily spending level.

Theoretically, a virtual credit card could be issued for each expense category, though that level of granularity is likely to be impractical even with the use of a digital wallet.

Make Subscription Management Easier

With subscription-based pricing models increasingly popular, subscription costs are a rapidly growing cost center for businesses. According to a 2021 report by BetterCloud, businesses use an average of 110 SaaS solutions, a number that has likely increased since the report was published.

Given such a high number of SaaS tools in use, which will be spread out across business units and departments, managing subscription costs is not an easy task. Virtual cards can make this easier as a unique card can be used for each subscription. 

With this approach, accounting and finance teams don't have to sift through all card transactions to find all of the company's SaaS costs. Instead, they can simply look at the list of virtual cards issued for SaaS tools and the monthly spend on each to get a quick understanding of how much is being spent and where potential savings opportunities may exist.

Issue Unlimited Virtual Cards With Torpago

The Torpago platform makes it easy to issue unlimited virtual cards for as many uses as you need and allows them to be added to digital wallets. Purchases made with Torpago virtual cards receive the same 1.25% cash back rewards as purchases with our physical card, and there is no maximum limit.

Our platform includes robust spend management capabilities that make it easy to set spend limits, transaction limits, merchant category limits, and more - for virtual and physical cards alike. And with over 1,000 integrations with HRIS, accounting, banking, & productivity tools, Torpago is easy to incorporate into your existing technology stack. 

Request a free demo today to learn how switching to Torpago can benefit your bottom line!

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