There has been a notable increase in the use of virtual cards in the past few months. Online spend, subscriptions and the need for managing remote teams grew significantly in the complex business environment caused by the COVID-19 situation. But now that things are slowly getting back to normal and European borders are opening, how can one utilise and adapt these tools to the standard business practice?
Payhawk has been shedding light on the concept of virtual cards and their benefits in several articles. You can read our blog on what is important when choosing a virtual card here. Or in case you prefer webinars, we had it thoroughly explained by Clive Cornelius, Head of Travel Segment Visa Europe.
In short, virtual cards have the exact same features as standard physical cards, but without the plastic equivalent. Virtual cards are issued by the major card networks such as VISA and Mastercard and in recent years gained significant popularity due to the rise of neobanks and fintech companies.
Virtual cards offer many value-added features such as better control and security, automated reconciliation, improved budget tracking, real-time spending data and card sharing prevention, just to name a few. This is all very nice and undoubtedly useful, but can we use these virtual cards when things get back to normal? More particularly, how can we use these cards when we start traveling again?
As business trips are on the verge of a comeback, the topics of buying plane tickets, renting cars, and booking hotels are getting relevant again. So, the real question is: can businesses use virtual cards to accommodate their business travel needs?
In a word, YES. However, there are several very important aspects that one must consider.
Virtual Card Types
From the perspective of business travel there are three main types:
Virtual Credit Cards – these are as rare as they get. Credit cards are usually issued by traditional banks in the form of a plastic, physical card to which you can link a single transaction virtual card, i.e. due to security measures and risk of fraud when it comes to credit, the virtual credit cards are limited to a single transaction and are barely flexible in terms of corporate use. Immediately after the transaction these cards are disposed of which makes them practically impossible to use. This instrument is also offered by banks mostly to retail and not corporate clients.
Virtual Debit Cards (PREPAID) – the problem in disguise. Most neobanks and fintech companies are providing prepaid debit cards to their customers. However such cards have limited capabilities due to their nature. Prepaid cards are lower level payment instruments limited to the specific amount loaded in the respective card. They do not allow spend from the associated account. The merchants’ payment terminals are programmed to distinguish between card types, but we will get to that later.
Virtual Debit Cards (COMMERCIAL) – the one to go for! Commercial debit cards are a high-level debit instrument and these cards have the same acceptance rate as credit cards. Commercial debit cards also allow budget allocation and control without compromising the experience and capabilities. That is why we, at Payhawk, offer Commercial debit cards to all our clients. They have plenty of useful features, such as top-up request, where employees can request specific amounts if needed on the spot.
What do the car rentals and hotels say?
First things first, do not confuse renting a car with a personal card with renting it with a corporate card. Car rentals are concerned about the safety of their assets. That is why the general perception is that they require credit cards. There is a simple explanation behind it. If you crash the car, the rental companies can still collect their money, even if the money is not technically yours. Hence, some car rentals perform credit checks which sometimes result in higher deposits or even denial. Keeping in mind that this is a corporate owned card. The liability lies with the company not the individual, making the lives of everyone a lot easier.
Debit cards are welcome – all major car rentals now accept debit cards. There are just a couple of simple rules: have a valid driver’s license, a major card network debit card and enough money to cover the deposit. That is it.
Prepaid cards are not accepted – simple as that, car rentals do not accept prepaid cards. There may be many reasons, but the foremost important is that when you insert the card data the payment simply will not go through.
The situation with hotels is pretty much the same. The main thing is to ensure you have the necessary funds available in your corporate debit card.
Why should I use a Virtual Commercial Debit Card?
Virtual cards offer a great amount of convenience. They are issued instantly and can be disposed of – instantly. However, they were hard to manage, risky and more importantly not really functional, until now. To be completely frank, a Virtual Commercial Debit Card is as good as it gets. To get one for your business apply here.