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 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 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Are no longer valid once the maximum dollar value has been reached
Listed by CFO Tech as one of the Top 10 Accounts Payable Solution Providers 2018 and 2019 and by CIO Review as part of the 20 Most Promising Corporate Finance Tech companies for 2017, OnPay Solutions streamlines processes for accounts payable by automating invoice processing and payments.