There are many different types of Commercial Credit options available to businesses these days.  There are Travel and Entertainment Cards (T&E), Purchasing Cards, Fleet Cards, Prepaid Cards and more. For today’s blog we want to focus our attention on differentiating Purchasing Cards from Virtual Cards to allow our readers to gain a better perspective on how and when to use each. 

Purchasing Cards 

Purchasing Cards give employees streamlined purchasing power, and allow management to know that purchase controls are in place.

Purchasing card use has risen dramatically in the past years as companies and governments seek to reduce the friction in making purchases. Purchasing cards (P-Cards) is a form of company charge card that allows goods and services to be procured without using a traditional purchasing process.

The P-cards are issued to employees who are expected to follow the guidelines for use of the card and a variety of controls can be put on these cards:

• Single-purchase dollar limits
• Monthly purchase dollar limits
• Restriction to purchasing goods or services in specific merchant category code (MCC)
• Review and approval of each purchase or of purchases --at least monthly by an independent of the cardholder

Virtual Card Payments on the other hand are designed to streamline the accounts payable process by converting checks to a secure e-payment eliminating the costs associated with distributing paper checks, speeding up the turnaround time in which your vendors receive payments and reducing the risk associated with lost and stolen paper checks. The added benefit is that it makes your Accounts Payable process substantially more efficient.

Virtual Cards 

Virtual Cards or single-issue cards (controlled payment numbers / one-time use credit cards) allow companies to issue credit payments electronically to pay vendors through an existing payment card network all while maintaining the highest security standards. Each virtual card is issued to a specific vendor for a specific dollar amount. The cards are processed by the vendor similarly to the traditional credit or pay card payments without a physical card or open line of credit being provided.

With Virtual Cards, card numbers:

• Are unique for each transaction
• Are activated and assigned to designated organizations
• Carry a specific maximum dollar amount that will ever be authorized
• May carry GL clearing information for ease of applying to overall systems
• Are no longer valid once the maximum dollar value has been reached

More on Virtual Cards:

• vCards - How to Revolutionize Your Business with Virtual Credit Card Payments
• Which Should You Use? Purchasing Cards or Virtual Cards?
• Futuristic B2B Payments: Virtual Cards, ACH and Accounts Receivable Challenges
• The Benefits of Virtual Cards
• 5 Reasons Your Company Should Issue A/P Payments with Virtual Credit Cards

If you would like more information on streamlining your payables process using a virtual card program we can help ...

This article was updated for quality content on 1/30/2020.