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Mastering business spend – how businesses see virtual cards as an essential tool

4.5-minute read

In this article, Kirsty Morris, Managing Director of Specialist Sales at Barclaycard Payments, explains what virtual cards are and how they can be used for employee out-of-pocket spending. Bringing greater control to businesses, and making spending on the go easy for employees, are virtual cards the way of the future?

It’s never been easier, quicker or more convenient for employees to spend on the go, thanks to the rise in adoption of virtual cards transforming the face of business expenses. Virtual cards offer a solution for businesses looking to streamline their expenses process and gain a holistic view of their business spending.

For many businesses, the idea of a virtual card may still be unexplored territory – but research predicts that digital card transactions will increase by 370% globally in five years[1] due to their simplicity – especially for the business-to-business market.

What are virtual cards?

A virtual card is a temporary card number, generated at the request of registered employees via their mobile phone, whenever they need to make a business payment. It’s not like a physical credit card; no one actually owns a virtual card, but they are carefully controlled.

 

Businesses choose people to act as account administrators and set limiting factors such as the amount that can be spent and the timeframe that the virtual card can be used for before it expires. For example, a card might be restricted to a single purchase, or available to use for all expenses incurred during a business trip.

With access to a dedicated portal, companies and administrators have increased visibility and greater control of employee spending. In this way, they can reduce unnecessary or unapproved business spending and manage budgets more effectively.  

Digital wallets are becoming the payment of choice

It really is one of those win-win situations: digital wallets can be good for businesses, and good for employees. I expect the use of virtual cards to increase rapidly, not least because they are a natural evolution and progression from the broader change in consumer payment habits. As described in the recent Barclaycard Payments report Understanding a fast-moving payments landscape, one of the standout shifts of recent times has been the growth of digital wallets. This research, which is based on feedback from 250 UK corporates and SMEs, finds that nearly half of businesses receive over 30% of their takings through digital wallet payments. For one in seven, this rises to over 40% of takings.

Consumers are becoming ever more comfortable with managing payments through a digital wallet on their mobile phone. For many, it has become the payment method of choice – no more needing to remember your physical wallet/purse or payment cards, no more having to enter card numbers or passwords. Simply pay from your phone, whether in-store or online.

For this reason, I see virtual corporate cards becoming increasingly popular as a concept for business spending. Corporate cards will become like personal cards – stored on employees’ phones in a digital wallet, so that they can flip between cards according to what they’re doing.

1 Juniper Research, June 2021.

Virtual cards improve the employee experience

Providing staff with a virtual card facility could be seen as another way to improve the employee experience. It aligns with how people behave in their personal life and simply makes it easier for team members to get things done – reducing the hassle of getting expenses refunded or accessing cash advances. Virtual cards are especially convenient in an age when remote working is more common and employees may have more items and costs to expense than before. Research shows that 90% of finance professionals have allowed employees to expense a wider range of items than ever before, while 31% say employees are now expensing more than they were pre-pandemic.[2]

Virtual cards are especially convenient in an age when remote working is more common and employees may have more items and costs to expense than before.

Our award-winning virtual card solutions are a convenient way to make payments to suppliers using specific transaction dates and values. They can be used online, by phone, via app or embedded into your systems, offering the simplicity, flexibility and visibility of a purchasing card, but with robust pre-approval and simple automated reconciliation. So both buyers and suppliers know they’ll be paid on time and on budget.

Fewer cards means less plastic

Another positive aspect of virtual cards is that they have an environmental benefit, reducing the amount of plastic that is produced. It has been estimated that there are over 25 billion debit, credit and prepaid cards in circulation globally, and this is projected to rise to over 30 billion by 2026.[3] Increasing the use of virtual cards could help to slow down the increase of plastic cards and, over time, save natural resources and reduce waste.

It’s a good reason in itself to embrace virtual cards, and will resonate with employees who are increasingly conscious of environmental issues.

From adding more control over expenses and simplifying procurement procedures, to improving employee satisfaction and protecting the environment, the case for switching to virtual cards is compelling for organisations of all sizes. While it’s impossible to accurately predict how fast virtual cards will come to dominate B2B spend, it’s almost certain they will do, and for the better. Is it time your business embraced the future?

It has been estimated that there are over 25 billion debit, credit and prepaid cards in circulation globally, and this is projected to rise to over 30 billion by 2026.

Deepen your understanding of payments trends

Virtual cards are one emerging trend – but there are many others alongside this in a payments environment that’s continually evolving.

Find out more about what’s changing in eCommerce and payments, and how it could apply to your business, in our recent whitepaper Understanding a fast-moving payments landscape.

[1] PYMTS, 2022.
[2] Statista, 2022.