Complexities breed inefficiency, as business-to-business (B2B) payments throughout their history have proven.
But B2B payments should be simple, easy and secure. In an era when digital transformation is reshaping every element of business operations, virtual cards are emerging as a powerful tool to help streamline payments, improve financial control and foster strong relationships between buyers and suppliers.
“We’ve seen tremendous growth in virtual cards over recent years,” Widad Chaoui, vice president and general manager, corporate program product management at American Express, told PYMNTS, noting that fundamental to the promise of virtual cards is their ability to deliver enhanced fraud protection, automation and flexibility compared to traditional methods, such as checks — three qualities that resonate strongly.
“They are dynamic digital payment methods that deliver better fraud protection and enable greater spend controls [than legacy B2B payments]. At their core, virtual cards provide businesses with flexibility, security and efficiency,” Chaoui said.
But what, exactly, are virtual cards?
Virtual cards, issued as digital tokens tied to existing credit or charge cards, provide an added layer of security by avoiding the exposure of full card details during transactions.
This feature, combined with time-bound spending limits and project-specific budgets, help companies exercise control over expenditures, making virtual cards a popular choice for commercial payments.
While still in the early stages of adoption, this payment solution represents a digital evolution of traditional credit and charge cards.
Businesses are adopting virtual cards for three primary reasons, Chaoui said: “Ease of use, extracting more value from payments, and automation.”
Virtual cards can integrate seamlessly into existing systems, offering a straightforward, user-friendly payment method.
“The simplicity of virtual cards is a major factor in their adoption,” Chaoui said.
Like traditional cards, virtual cards provide access to working capital and offer rebates or financial benefits.
“They give companies the ability to unlock value from their payments, whether through cash flow optimization or cost savings,” she said.
Virtual cards eliminate manual processes, such as invoice approvals and payment reconciliations. By reducing administrative overhead, companies can redirect resources toward driving growth.
“[Virtual cards] empower businesses to focus on value-added activities instead of chasing down paperwork,” Chaoui said.
Despite their evident advantages, scaling virtual card adoption is not without hurdles.
“There’s a need for education — both for buyers and suppliers — on how to use virtual cards, which spend categories they’re best suited for, and how to fully integrate them into existing workflows,” Chaoui said, noting that suppliers, in particular, may hesitate due to concerns about adoption complexity.
“Demonstrating the ROI of virtual cards is crucial,” Chaoui said. “Suppliers need to understand how these tools can accelerate payments and reduce their days sales outstanding.”
Read more: Cutting the Checks: Boosting Commercial Payment Speed and Security With Virtual Cards
One of the most compelling advantages of virtual cards is their ability to strengthen buyer-supplier relationships. Chaoui challenged the common misconception that buyer and supplier priorities are at odds.
“We often think their needs are in opposition, but virtual cards create a symbiotic, positive relationship,” she said.
For buyers, virtual cards simplify transactions, enhance payment automation and reduce costs. Suppliers benefit from faster payment cycles than offered by traditional methods, and reduced time spent chasing invoices.
Chaoui identified three key areas where virtual cards are expected to expand: employee spend, supplier payments and expense management for small- to medium-sized enterprises (SMEs).
Already, virtual cards are becoming a go-to solution for contractors and freelancers who don’t have access to traditional employee cards.
“As more companies embrace flexible workforces, virtual cards will play a greater role in enabling business travel and discretionary expenses,” Chaoui said.
Elsewhere, industries like healthcare and construction are leading the way in using virtual cards for recurring invoice payments.
“We’re seeing significant adoption in these sectors, but I expect other industries to catch up as suppliers become more educated on the benefits,” she said.
As businesses, including SMEs, integrate virtual cards more deeply into their operations, they unlock opportunities for bottom-line enhancements and scalability. The ability to automate payment workflows allows organizations to focus on strategic initiatives rather than back-office inefficiencies.
“For SMEs, virtual cards are about control — managing spending and improving expense tracking through automation,” Chaoui said.
While still in the early stages of adoption, virtual cards are poised to become a cornerstone of commercial payments. The key to unlocking their full potential lies in education and integration.
“We’re just scratching the surface,” Chaoui said. “The more businesses and suppliers understand how virtual cards can enhance their operations, the faster adoption will grow.”
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