Virtual cards are steadily gaining popularity as the payment method of choice for growing numbers of corporates across South Africa and globally, writes Chris Wood, Executive Card Issuing and Payments at Nedbank including American Express.

These innovative digital payment solutions allow for the use of a secure, unique, 16-digit card number to make payments, instead of a physical corporate credit card. Nedbank and American Express have been leading the way for our customers in the use of virtual card, and the payment format holds a number of potential benefits for businesses and sectors of all types.

The most significant of these is security and control over the purchasing process. Virtual cards can create the controls and efficiencies required for any business to process payments and monitor transactions. Including ensuring that the invoiced amount is paid, down to the cent, and only authorised buyers are able to transact.

In addition, controls are put in place when virtual cards are created to ensure that payments are only made to merchants provided for on the system. All of which serves to significantly streamline and secure the once-complicated universe of corporate card payments, settlements and reconciliation, and most importantly tackle card fraud.

Another significant benefit is the added data that becomes accessible through the use of virtual cards to the customer, which adds extensive clarity to tracking, administration and reporting across the payments value chain.

Given the successes of virtual card payments in the travel industry, there is potential for this to become the preferred payment method for business-to-business transactions across all industries. For American Express South Africa, we regularly see these types of benefits being unlocked for our corporate clients that make the move from ‘plastic’ card issuance to virtual payments.

However, while the business travel sector has been quick to embrace virtual payments, further supported by regulation in the airline industry that supports this increased usage in line with security measures for payment processing, there is opportunity for other business sectors to take advantage of virtual payments, which can be a still relatively unfamiliar concept to many businesses.

While many business customers are very accustomed to the use of corporate cards over cash, the evolution of flexible virtual card payment solutions provides significant benefits. Fortunately, a good virtual payments platform is not limited to the one-size-fits-all variety. A virtual payment offering, for example, can be fully customised and integrated to existing platforms to adapt to the specific nuances and the unique processes of most existing corporate payments systems by the business in question.

While virtual card adoption rates are showing increased uptake, further industry education is required on the benefits of the technology. Virtual payments can be a huge benefit to suppliers, as generally the number one priority of any accounts receivable department is to prioritise the quick receipt of payments, thereby securing cashflow. Key to resolving this is greater hands-on support provided by a bank’s commercial card team in rolling out, training and supporting virtual payments into the day to day processes of the business, and wider market awareness

While there is typically a period of adjustment required by all parties when a virtual payments system is implemented, once stakeholders have experienced the numerous benefits of virtual payments, there is often a shift toward using virtual payments for more types of purchases.

This is especially true of merchants. The feedback we most often hear is that the shift to virtual payments not only provides them with a sense of confidence that the payment that needs to be made will be made, but also that there is a significant positive impact on their cashflow positions thanks to the rapid settlement of charges when compared to the traditional bill-back process.

For businesses that don’t have the resources to create their own platforms to support the deeper integration of virtual payments, American Express vPayment can be accessed via a standalone web-based virtual card solution that operates separately from the physical card payments system and is used solely to process virtual payments. This is often the perfect place to start, with very low technical requirements, but still with all the benefits of the virtual card solution to facilitate secure digital payments.

Irrespective of which solution works best for any given business, the time has undoubtedly come for organisations of all shapes and sizes, in every sector and market, to understand that payments are moving quickly into the virtual realm. And virtual payments providers have the responsibility of partnering with all their clients to help them take whatever action they can to move towards embracing this type of payments ecosystem; not just to ensure that they don’t get left behind, but also that they enjoy the many benefits and advantages that virtual payments offer.

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