A SaaS company in New York City needs to issue cards to its remote employees, but it’s concerned about controlling spend and potential fraud. Across the country in Los Angeles, a travel agency needs to figure out a way to pre-pay hotel payments for clients. Despite being drastically different industries, the answer to both dilemmas is the same.
Whether you’re a logistics firm trying to pay freight vendors or a tech company trying to track expenditures, working with a virtual card issuing platform is essential for fraud reduction, automated expense reconciliation, and setting spend limits. By understanding how to evaluate different platforms, you can make the right decision for your business.
TL;DR
- Virtual card issuing allows businesses and platforms to create and control virtual payment cards directly instead of simply using them as cardholders.
- These cards can be set up with geographic, frequency, merchant category code, and spending limits.
- Often, virtual cards are used by SaaS businesses and travel agencies. They are commonly used for marketplace payouts, employee expenses, and B2B supplier payments.
- As a business, it’s important to evaluate a potential issuer’s fraud prevention measures, single-use and multi-use card capabilities, integration options, card controls, funding choices, scalability, and compliance support.
- By working with PayCompass, businesses can narrow down the list of virtual card issuers and find a provider that matches their needs.
What Virtual Card Issuing Actually Involves
The advantages of virtual card issuing vary based on whether you’re the cardholder using the card or the platform issuing it. Most businesses are familiar with how virtual cards are used by employees for travel spending, expenses, subscriptions, and paying vendor accounts.
A virtual card platform is different because it lets your business, fintech, travel agency, or SaaS business issue, manage, and control the cards yourself. You’re not the end user. Instead, you’re in the driver’s seat.
As such, you are just one of several players in the virtual card ecosystem.
- Issuing Bank or BIN Sponsor: The issuing bank, also known as the BIN sponsor, is the financial institution that issues the card. They’re largely responsible for ensuring know-your-customer (KYC) regulations and anti-money-laundering (AML) compliance.
- Card Network: Visa, Mastercard, and other card networks are necessary for transaction routing, interchange frameworks, and global card acceptance.
- Program Manager: The program manager handles the card program configuration, reporting, network certification processes, and the operational side of things. In some fintech stacks, the program manager and platform provider are the same entity.
- API or Platform Layer: As the business, the platform or API is what you actually interact with on a day-to-day basis. It allows you to set spend limits, create virtual cards, generate reports, and automate workflows.
These parts must work together for cards to be issued and used successfully. First, the issuing bank sponsors the program. Then, the card network ensures the card can be accepted around the world. Finally, the program manager must oversee the program’s operations. If all of these parts work together successfully, the business can use the API layer to create and control cards.
Common Use Cases for Business Virtual Card Issuing
Deciding to issue virtual cards can benefit many organizations, but there are a few industries where this tool is especially useful. Additionally, any business that needs support with employee expense management and supplier payments can benefit from virtual card issuance.
B2B Supplier and Vendor Payments
The majority of industries can benefit from using a virtual card issuing platform for B2B supplier and vendor payments. With a virtual card, you can limit spending for specific vendors and gain tighter control over your accounts payable processes. You can set up virtual cards as single-use cards, which limits the potential for fraud. Additionally, issuing virtual cards can make reconciliation easier for your finance and accounting teams.
Employee Expense Management
Virtual card solutions are effective for employee expense management. Your employees can make the purchases they need for work without placing all of your company’s funds at risk. You can set up cards with expiration dates, custom spend limits, and department-level budgets.
Travel Agency Client Payments
For travel agents, issuing virtual cards is an invaluable tool. When the agent books a flight or hotel room for a client, they can use a single-use card to do so. These cards can be configured with limits and expiration date controls, so you don’t have to worry about the card being reused after the client’s travel is complete. Plus, cards can feature merchant category code restrictions, so they can only be used for travel-related pre-payments.
Marketplace and Platform Payouts
Often, gig economy platforms and online marketplaces rely on bank transfers to pay contractors. With virtual cards, the marketplace can issue cards with predefined balance and usage rules. Additionally, real-time card issuance means contractors can be paid immediately for their services.
What To Evaluate in a Virtual Card Issuing Platform
In order to start issuing virtual cards, you need to find the right virtual card issuer to work with. As you evaluate a potential partner, inquire about the following features.
Card Controls
Ask the platform if they offer card controls. You will most likely want the ability to set per-card spend limits, create expiry dates, limit merchant category codes, and restrict certain geographic areas. For your convenience, all of these limits must be possible to update in real time.
Issuance Speed
When you need to set up a virtual card, you can’t afford to wait. Before you set up an account with a specific platform, you should ask how quickly cards can be created via API and if they can be issued in bulk. You’ll also want to see if you have a self-serve portal because some providers only offer API access.
Network and Acceptance
The provider’s banking and card network relationships will impact the geographic regions your cards can work in, reliability, and scalability. Before you work with any provider, you should ask if they work with Visa, Mastercard, or other card networks. You’ll also need to find out which countries and currencies are accepted.
Reconciliation and Reporting Tools
Once you start an account with a virtual card platform, you will need to use the transaction data in your reconciliation processes, purchase orders, and expense management tools. You need a platform that offers convenient integrations, so you can export transaction data into your accounting tools. Additionally, the platform should allow you to attach purchase orders and reference numbers to card payments, so you can easily track what was paid for, who was paid, and why.
Funding Approach
Virtual cards can be funded in different ways, so talk to the issuer about the options they have available. For example, you may want to fund it with a credit line, a prefunded account, or a connected bank account. You’ll also want to ask about the timing of settlement and funding because the timing can affect cash flow and working capital float.
Compliance Measures
A virtual card issuer has legal KYC and AML requirements that it must meet. Before you start working with a specific issuer, it helps to know what type of documentation will be needed during the onboarding process. Some providers also require a minimum business size or transaction volume, so you should ask about these topics as well.
A Checklist of Must-Have Virtual Card Features
When it comes to virtual cards, there are a few specific features you should look for in a provider. With the following virtual card checklist, you can make sure your ultimate choice lives up to your expectations.
- Instant virtual card issuance
- Single-use and multi-use card capabilities
- Fraud prevention tools
- Spend controls for specific geographic regions, amounts, and frequencies
- Multi-currency and cross-border support
- Real-time transaction visibility
- API access
- ERP and accounting integrations
- Role-based permissions
- Intuitive user dashboard
- Customized reporting and analytics
- Transparent pricing
- Scalable infrastructure
- Reliable uptime
Questions To Ask the Virtual Card Issuing Platform
Because of the impact your decision will have on your account, reconciliation, expense management, and purchasing decisions, it helps to get a deeper understanding of the provider’s process and offerings.
- How does pricing change as transaction volume increases?
- How quickly can the provider issue and fund cards?
- What currencies and countries are supported?
- Does the platform support embedded payments?
- What does the provider do to prevent fraud?
- How does the platform ensure compliance?
- What kind of accounting and ERP integrations are available?
- Are all fees disclosed upfront?
- Can spend rules be customized?
- What uptime level is guaranteed?
How PayCompass Can Help You Choose the Right Program for Your Business
At PayCompass, we can help you go beyond just comparing different features. Our team can identify the virtual card programs and infrastructure your business needs to succeed.
Some platforms are only willing to work with low-risk businesses. Because of this, it’s essential to find a virtual card issuing provider that can accommodate your needs. We have years of experience in the payments industry, so we know which providers will work with different types of businesses.
Whether you’re paying a B2B supplier or need to book travel arrangements, PayCompass can help you assess each issuer’s BIN sponsorship options, fraud prevention requirements, card network availability, and funding models. Then, we can help you set up a scalable, secure virtual card solution for your business.
Final Thoughts
A virtual card issuing platform is a convenient tool for modern companies. It allows you to control spend for supplier payments and employee expenses on a granular level. Because of advanced options like single-use cards and geographic limitations, you can also prevent fraudulent transactions.
From real-time visibility to flexible funding options, the right platform will offer the operational controls and support you need. Learn more about virtual card issuers by visiting PayCompass today.
Ready to Transform the Way You Do Business?
Don’t settle for less when it comes to payment processing. With PayCompass, you get smarter, faster, and more reliable solutions tailored to your unique needs. Join thousands of businesses who trust us to keep their business moving forward.
Similar Posts
Continuity Subscription Merchant Accounts: Why Approval Is Harder
As a continuity merchant, you face unique chargeback risks. Because of this, merchant account providers are more hesitant to approve new accounts. Often, continuity merchants will apply for an account and never know why their application was declined or terminated. Ultimately, the reason for a declined account application is your classification, not your creditworthiness. A […]
Recurring Payment Solutions: How To Reduce Failed Renewals and Chargebacks
With a subscription model, companies generate consistent recurring revenue instead of relying on a single upfront purchase. Because of this, a failed renewal represents a major risk to your revenue stream. Each time a renewal fails or a chargeback occurs, you are losing an ongoing source of income. By understanding chargebacks, failed renewals, and why […]
B2B Payment Gateway Guide: Features, Approval, and Risk
When a business pays another business, the process is different from when a consumer pays a business. Business-to-business (B2B) payments often involve higher transaction volumes, net terms, tighter underwriting, slow approval cycles, invoices, and multiple stakeholders. Because of this, B2B payment gateways must be set up to work in different ways. By making a few […]
White-Label Payment Processing: How It Works for ISOs, SaaS Platforms, and Resellers
With the development of integrated payment setups, businesses have a new revenue opportunity available. The challenge is launching a processing setup quickly without having to build it from scratch. For independent sales organizations (ISOs), SaaS businesses, resellers, and fintech startups, white-label payment processing offers an effective, scalable way to set up payment operations without having […]
Merchant Account Reserve: What It Is and How Rolling Reserves Affect Cash Flow
Getting approved for your merchant account is only the first step in bringing in revenue. As a part of your account setup, you’ll have to agree to specific terms and processing fees. If your company is considered a higher risk, you may be required to have a merchant account reserve. Reserves are used to offset […]
Digital Goods Chargebacks: The Hidden Cost of Instant Delivery
Last year, the global e-commerce market brought in $33.91 trillion in revenue. While e-commerce sales are projected to grow significantly, there are potential risks involved for merchants. Because of fast fulfillment timelines, friendly fraud, forgotten subscriptions, and customer confusion, digital goods chargebacks occur at a more frequent rate than chargebacks from physical goods. By understanding […]
Payment Processing Fees by Industry: Average Rates and What Businesses Should Expect
Each industry has a different risk level driven by fraud, chargeback rates, and other factors. For instance, low-risk industries typically have chargeback rates as low as 0.1% to 0.3%. Meanwhile, high-risk industries can easily have chargeback rates of 0.7% to 1.5%. Higher chargeback rates lead to more risks for the payment processor. In turn, these […]
MCC 6050: Quasi-Cash & Member Financial Institutions (Description and Payment Processing Impact)
Merchant category code (MCC) 6050 is designed for quasi-cash and member financial institutions. As such, it is often used for foreign currency transfers and remittances. When merchants are classified under the 6050 MCC code, it increases their regulatory scrutiny. Because of the higher rates of fraud and chargebacks, processors often charge MCC 6050 merchants more. […]
Mastercard Send vs. Visa Direct: How the Major Payout Rails Compare
As a business, there are times when you need to send real-time payouts to your customers, employees, vendors, and business partners. The right payout rail can make a difference. Traditional rails, like ACH and wire transfers, lack the speed and user experience that global companies require. By using Mastercard Send and Visa Direct for push […]
Chargeback Rates by Industry: Benchmarks, Averages, and What Counts as High
As a merchant, your chargeback rate can impact your processing fees, terms, and account availability. Your ideal rate can vary based on your industry benchmark. Some industries, like travel and SaaS, have higher chargeback rates than others. By understanding major drivers and variations in chargeback rates by industry, you can take the next step toward […]