Kontrol Payables Journal

Cutting Costs, Boosting Security: 4 Ways Ecommerce Wins with Virtual Card

Posted on Jan 31, 2017, 7:00:00 AM by Scott Songer

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A recent article on PYMNTS.com highlighted how payment security concerns have helped fuel the explosive growth of virtual cards in the travel vertical. Over the last fifteen years, online travel agencies (OTA's) like Expedia and Orbitz have revolutionized travel planning by empowering consumers - and, increasingly, small to midsize companies - to book an entire suite of travel services at the click of a button. The ability to make airline, hotel, car, and even activity reservations without having to pick up a phone or visit a host of different sites is tremendously appealing to many leisure and business travelers.

But innovation does not come without challenges, of course, and a significant one for OTA's is maintaining the security of a huge volume of customer credit card data while transmitting payments to hotels, airlines, and other travel service providers around the globe. 

Enter virtual cards. By using a randomly generated, single-use, sixteen-digit account number to pay their customers' travel expenses, OTA's eliminate the need to store their users' sensitive credit card data. But virtual cards offer these online businesses several other compelling advantages over other payment forms, including cutting the cost of doing business by almost half. And other types of ecommerce companies - from traditional retailers, to dropshippers and their on-demand service analogs like GrubHub and New York's ZipDrug, to B2B ecommerce - are poised to take advantage of these benefits as well:

1. Unparalleled Payment Security

This bears repeating: When you're processing the volume of credit card payments that online business necessitates, your payment security and that of your customers is paramount.

From not having to store customer's credit card data when transmitting payments on their behalf to third parties, to a one-time account number that cannot be reused for any other purpose, and is prefunded to the exact amount of your payment, the fraud protection that comes baked in with virtual cards is more advanced than that of just about any other payment type. 

2. Offsetting Business Costs

A more secure payment platform is essential, but does it have to be expensive? Surprisingly, it doesn't. In fact, virtual card costs nothing to implement and can significantly reduce the costs of conducting ecommerce.

That's because, just as ecommerce companies pay to process their customers' credit card payments, their suppliers - hotels, airlines, restaurants, wholesalers, manufacturers, etc. - pay to accept those ecommerce companies' virtual card payments. And the virtual card model takes those vendor fees and translates them into a cash rebate for virtual card users. So ecommerce companies can actually make money while paying their suppliers, and the net effect is that their own credit card processing costs may be reduced by up to half. 

Your virtual card provider may also be able to help you find a credit card processor that offers more favorable terms, further reducing your business costs.

Download our FAQs on Virtual Card to find out more about how the rebate program works. 

3. Payment Fluidity

The ability to transmit payments quickly and easily in all directions is particularly critical to customer-centric organizations like OTA's, but virtual cards work with any ERP to deliver both scheduled and on-demand payments with a minimum of hands-on time for AP staff. 

A virtual card provider that offers push-pay services can help you integrate ACH, wire and check payments as well, to efficiently pay suppliers that don't accept virtual vard, which is particularly useful in the B2B ecommerce sphere.

4. Mobile Payments for Mobile Business

Ecommerce is driven by mobile users. Shouldn't its AP be as nimble? Mobile access - including smartphone-enabled virtual card account platforms - means you can check in on your payments anytime from anywhere, making you an AP road warrior. Virtual card providers should offer mobile access to their ecommerce clients as a matter of course.

Conclusion

Virtual card is a win-win proposition for many industries, offering a significant source of revenue along with easier, more secure payments. As bricks and mortar business increasingly melds with online commerce, we'll see more and more adoption of this payment form - and less and less reliance on checks and other electronic payment forms like ACH and wire. 

New to Virtual card? Download our VC 101 primer for a deeper dive into the next generation of accounts payable.

Virtual Card 101 Download

Topics: Payment Cards, Payment Fraud, security, Rebates, Ecommerce