A virtual card is a one-off payment card number, usually MasterCard or Visa, which is generated at the time of booking or purchase and; with more sophisticated solutions, a customer-defined set of data is automatically collected. This could range from information such as booker, traveller and supplier name, to details regarding cost centre, project code and authorisation number.

The generation of card numbers is carried out in different ways. Users log on to a portal provided by the issuer (normally a bank) to generate the card number, which they then forward to the supplier. However, it is increasingly common to integrate the functionality within a booking/purchasing tool, so that the virtual card number is generated automatically and forwarded to the supplier.

SunGard’s virtual card programme
SunGard announced at the annual Association of Financial Professionals (AFP) Conference in Las Vegas that their virtual card programme in the USA - AvantGard PayNextExchange - has seen more than 275% increase year over year in virtual card transactions.  Additionally, SunGard’s customers are earning on average $40 per card transaction through cost savings (over cheques) and rebates.

An important component behind the success of any virtual card program is the vendor enrolment team based. SunGard have a dedicated team that operates as a value-added resource to each payer on the platform, actively campaigning to vendors to accept virtual card or ACH over check payments.  

Glenn Kloos, vice president of procurement, and former vice president of treasury, at Zachry Industrial, Inc. who was in charge of their award winning programme, commented that, “The project to migrate checks to virtual card has easily proven itself. The benefits we have been able to achieve using SunGard’s AvantGard PayNetExchange platform have been numerous and include eliminating our payments processing costs, gaining visibility into remittances and improving operational efficiencies. The most significant benefit, however, has been our ability to earn rebates simply by making payments to our suppliers via virtual cards. Our company is able to use those rebates to invest in the growth of our company.”

Single use cards in T&E 
Another benefit of virtual cards is the single-use unique card numbers with set credit limits based on the company’s payment instructions, which offers greater security and simplified reconciliation over other payment methods.

BofA Merrill are promoting the use of virtual cards in travel and entertainment expenditure, e.g. single use numbers with a fixed budget for a company event. 

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The use of virtual cards is growing world-wide as banks and corporates work out how to exploit the undoubted advantages, but don’t put too much emphasis in your plans on the rebate income as the regulatory authorities and retailing groups are determined to reduce, at least and preferably eliminate, this form of card charges. Nevertheless, the cost savings alone from virtual cards often justify their use.