Virtual Cards Gain Ground Over ACH in B2B Payments


The accelerated digitization caused by shutdowns and operational restrictions during the pandemic has inspired a series of financial experiments, many of which have shown to be successful.

For example, 55% of chief financial officers (CFOs) now say electronic payments with virtual cards are being used more frequently than they were before the pandemic due to digital innovation, according to the B2B Digital Payments Tracker. , a collaboration between PYMNTS and American Express.

Get the report: B2B Digital Payment Tracking

While Automated Clearinghouse Transfer (ACH) remains the most sought-after electronic payment processing tool, 28% of business owners also plan to invest in virtual cards in the near future.

Transparency and control

Virtual cards make payment more efficient by eliminating manual processes like data entry and streamlining reconciliation, RJ Ancona, vice president and general manager, B2B, global merchant and network services at American Express, told PYMNTS in an interview in January.

Read more: Virtual Cards Streamline B2B Commerce in Uncertain Times

For suppliers, virtual cards increase communication and alignment on invoices and invoicing. For shoppers, they offer an extra layer of security and control, as single-use virtual cards ensure that only particular charges or bills are authorized. They also offer buyer rewards and cash back.

“You won’t get those features on things like ACH or debit cards, so we’re seeing more and more companies find a win-win situation between buyer and supplier associated with that,” Ancona said. .

Before the pandemic, cash, checks and physical debit or credit cards were the most common methods of payment. Today, the use of manual methods is down, with 78% of CFOs using cash on delivery less frequently and 40% reducing their use of paper checks.

Better B2B payments

It’s hard to ignore the rise of virtual cards in the business-to-business (B2B) space. Businesses can integrate them to improve cash flow, enhance security, and enable Accounts Payable (AP) automation more seamlessly than when relying on cumbersome and outdated methods such as paper checks. Enabling virtual card acceptance through Accounts Receivable (AR) automation can also increase efficiency and help businesses capture important spending opportunities.

One feature that sets virtual cards apart from other electronic payment methods is their ability to offer built-in security features. Unlike traditional debit or credit cards, digital cards rely on tokenization to process cardholder transactions, creating a one-time, randomly generated one-time code to process each payment.

The risk of fraudsters acquiring the data used to make a virtual card payment – ​​and could exploit those details if they do – is astronomically low compared to physical card transactions, and its digital footprint makes it easier to track suspicious activity. This is especially important for businesses, as high traffic can often lead to difficulties in detecting fraudulent behavior.

Virtual cards have a bright future as a secure and convenient B2B payment method, even when compared to the current leader in the electronic payments space: debit-based ACH.

B2B businesses that haven’t already done so should consider integrating virtual cards into their day-to-day operations to reduce fraud, improve supplier relationships, and better understand business spend.



About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are succeeding and where they need to up their game to deliver a personalized shopping experience.


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