Efficient payment management with virtual commercial cards

In today’s digital world, efficient payment management is a key to success for companies to reduce their (administrative) costs through lean internal processes in an increasingly complex environment. The issuing of commercial cards within a company also often is inflexible and only helps to a limited extent with internal organization and billing. However, there is an innovative solution that helps companies to optimize their overall process, from approving employee expenses to booking them correctly, while at the same time saving costs: Virtual commercial cards.

Virtual commercial cards not only offer a secure and efficient payment method, but also a wide range of benefits for companies. In this blog article, we take a closer look at this type of commercial card and show how you as an issuer can position yourself sustainably in the context of increasing requirements. Find out how virtual commercial cards are revolutionizing payment management and help companies to increase efficiency and reduce costs.

What are virtual commercial cards?

Virtual commercial cards are digital payments instruments that companies can use to optimize their payment processes. In contrast to conventional commercial cards, which are issued physically, virtual commercial cards solely exist in digital form. They are usually provided via an online platform or a mobile app.

The functionality of virtual commercial cards is based on the generation of virtual card (numbers), the design of which is very flexible. Companies for example can customize spending limits, categories and validity periods for specific employees or departments as. When issuing cards, a distinction is made between single-use (or single-purpose) and multi-use cards.

• Single-Use cards allow the card to be used only once, which may be limited to one merchant category. This can be, for example, the payment of a hotel stay, with reservation of an amount at check-in and the possibly deviating final payment upon departure.
• Multi-Use cards can be used several times and are comparable to traditional cards in this respect.

An important advantage of virtual commercial cards, especially for single-use cards, is the increased security compared to conventional commercial cards. The one-time use of virtual credit card numbers prevents sensitive credit card data from being stored by merchants or service providers. This reduces the risk of data leaks and unauthorized access to credit card information. For the card-issuing bank (issuer), this can significantly reduce the costs of fraud if the processes are properly secured, as the cards are issued for one-time use with restrictions.

An important advantage of virtual commercial cards, especially for single-use cards, is the increased security compared to conventional commercial cards.

At the same time, depending on the business model, the issuer earns more than just the interchange fee (which is not regulated for commercial cards). Depending on the depth of data and integration as well as the integration of service providers, additional sources of income arise, e.g. for the integration of travel services, travel expense reports or the detailed provision and analysis of data. By connecting to existing platforms, economies of scale can be achieved quickly from the issuer’s perspective and new customers can be integrated cost-efficiently. Such a connection can also be very interesting for service providers such as ERP system providers or travel expense accounting companies, as it gives them access to a larger number of potential customers.

How do companies benefit from virtual commercial cards?

If you want to evaluate the benefits of corporate credit cards, you need to consider several perspectives:

#1 Company integration

When providing the payment solution and integrating the company, the issuer’s task is to offer the greatest possible added value for the company in terms of transparency of payments, automated processes and thereof resulting lower (administrative) costs. Transparency is created by providing data at a detailed level, which the company can ideally transfer directly to its accounting system. Deeper integration can automate processes in approval and budgeting as well as the allocation of payments to persons and cost centers for accounting. Many issuers also offer integrations of ERP or accounting systems (e.g. SAP, Oracle, Sage, DATEV) for this purpose.

#2 Merchant integration

A regular offering with commercial cards is the direct integration of providers for common use cases in issuers platforms. For example, employees can book business trips directly via integrated travel agencies or purchase office supplies via purchasing platforms. This allows companies to better control budgets or company guidelines, for example by only showing employees hotels within their defined price range. In addition, the use of virtual credit cards opens considerable savings opportunities for companies with small or one-off service providers, as they can dispense with know-your-business (KYB) processes.

#3 User experience for employees

The use of company credit cards should be as simple, flexible and convenient as possible for employees. This applies to the application and approval as well as the use of the cards. In particular, employees are expected to enjoy the same benefits when using their commercial cards as they do when using their private card. These include broad acceptance and the possibility of mobile payments. The great advantage of virtual cards compared to “traditional” commercial cards is their flexibility, e.g. in setting spending limits, categories and validity periods for certain employees or departments. This also enables companies to provide external persons with a means of payment. This makes it much easier, for example, for applicants to pay for travel to job interviews.

Many young providers in the European market, such as Yokoy, Pleo, Pliant and Soldo, focus primarily on company integration and the user experience for employees. In this context the goal is to enable companies to use the most flexible and automated processes possible through an “expense management platform”. Employees, on the other hand, are enabled to use payment options in their work environment that they are familiar with in their private life.

In summary, virtual commercial cards offer numerous advantages: They enable efficient payment management, reduce administrative effort, offer increased security and allow better control of spending. Companies can benefit from the flexible application options and adaptability of virtual commercial cards and optimize their payment processes.

What are the possible applications and use cases for virtual commercial cards?

• Travel expense report: Virtual commercial cards facilitate the settlement of travel expenses for employees and companies. From the company’s point of view, the approval and release process is simplified, as is the subsequent billing and posting. Employees have a modern and convenient payment option and do not have to submit receipts.
• Procurement management: Companies can use virtual commercial cards to make purchases from suppliers and service providers. This simplifies the ordering process and enables faster delivery of goods and services.
• Subscription management: Virtual commercial cards can be used to manage subscriptions and recurring payments. Companies have full control over payments and can easily terminate or change subscriptions if necessary.

How is maximum customer focus achieved with regulatory compliance?

When using virtual commercial cards, issuers must comply with regulatory requirements such as the Payment Services Directive 2 (PSD2) and, in future, PSD3. These directives were introduced to ensure the security and protection of payments and financial data. Issuers must ensure that their virtual commercial cards meet strict security standards and that the required authentication procedures are implemented.

Issuers must ensure that their virtual commercial cards meet strict security standards.

Nevertheless, the simple and convenient use of virtual commercial cards for issuers and their customers must not be overlooked. User-friendliness and smooth integration into company processes are crucial to ensure the acceptance and success of virtual commercial cards. This not only strengthens customer loyalty, but also positions the issuer as a trustworthy partner in payment transactions.

How does Projective Group support issuers and companies when it comes to virtual commercial cards?

Projective Group supports issuers with expert knowledge and many years of experience in all aspects of virtual commercial cards. This begins with the strategic positioning of the issuer regarding the product range, target groups and markets and continues with the specification and implementation of this strategy. Together we develop answers to the following questions:

• Which markets are interesting for me as an issuer? How can I position myself in my existing markets or enter new ones?
• What are the requirements of potential customers and how will they develop?
• How am I positioned as an issuer and how are my competitors?
• How should my “virtual commercial cards” product be structured?
• How does the new product contribute to my profitability in the corporate customer business?
• What regulatory framework conditions do I need to consider?

Furthermore, Projective Group uses its many years of expertise to support companies, for example, in identifying the necessary and possible structure of their corporate credit card portfolio and in selecting the right issuer. The focus lies on the following questions:

• What configuration and level of integration do I need for my company?
• Which issuer offers the right product range for my requirements?

Would you like to find out more about virtual commercial cards and the opportunities they offer for your business model? Then please contact us.

About Projective Group

Established in 2006, Projective Group is a leading Financial Services change specialist.

We are recognised within the industry as a complete solutions provider, partnering with clients in Financial Services to provide resolutions that are both holistic and pragmatic.  We have evolved to become a trusted partner for companies that want to thrive and prosper in an ever-changing Financial Services landscape.