4 benefits of virtual cards for business owners

Explore the reasons why virtual cards might be the right fit for your business.

Want to make sure a vendor can’t reuse your physical business credit card or charge more later? Pay with a virtual card number and then lock it—and keep everything else running. Businesses are more likely to experience fraud on their account when their physical credit card is used in many places. Additionally, it’s an administrative headache to have to redistribute physical card information to recurring merchants and vendors following fraudulent activity on the business account. Learn more about how virtual card numbers can help you mitigate potential risk from typical business operations. 

What is a virtual card for business?

A virtual card number is a unique number that’s generated in a digital format and associated with your business account. Businesses can use virtual card numbers to pay for purchases when a physical card doesn’t need to be presented (e.g., online or even over the phone), just as they would input a normal physical card number. Virtual card numbers may also go by the terms “ghost cards,” “burner cards” or sometimes “masked cards.” Many virtual cards are designed to be used by a single vendor or supplier and would be declined if used elsewhere. Post-purchase, the transaction will usually appear on the account statement just like a purchase with a physical card. 

Virtual cards vs. physical cards

Virtual cards are usually tied to the same account as a business’s physical card. However, virtual card numbers are just that—virtual. When fraud occurs on the physical card, a business that uses virtual card numbers will not have to wait to receive a replacement card in the mail, so they can get back to purchasing for their business faster.

Advantages of virtual cards

Through interviews and surveys, Capital One discovered that most businesses are using virtual card numbers to protect their information and to manage their recurring merchants more securely. Virtual card numbers allow businesses to improve fraud protection, control vendor payments, align on business spending and goals, and can enable businesses to safely extend spending power to contractors and other employees.

Improved fraud protection

When customers use virtual cards, they can decrease the impact of fraud on a business. Some virtual cards, like the ones offered to Capital One small business customers, are specific to one merchant, so fraud on that card could not occur outside the merchant it was assigned to. Other virtual cards may be unbound, meaning they can be used by as many merchants as you’d like. Often, you’ll still see fraud benefits since those cards are used in fewer places. With Capital One, if fraud is reported on the physical card, virtual card numbers continue to work while Capital One sends a new physical card in the mail. If fraud is reported on a virtual card number, that specific virtual card number is locked and other virtual card numbers continue to work.

Manage employee spending

Limit when and where your employees and vendors spend. Give employees and contractors immediate access to spending without having to tie access to one specific employee via a physical employee card. Since virtual card numbers have specific parameters for use, virtual card numbers allow businesses to control exactly where payments are made, significantly reducing the potential risk of misuse from employees and contractors. Business owners can prevent overspending before it happens by limiting virtual card number use to one vendor and locking a card when needed.

Control over vendor payments

Control your card information while managing recurring and new vendor relationships. For businesses that give their card number out to suppliers or vendors over the phone or via email—or just manage a lot of vendor relationships—when an account is compromised, it can wreak havoc on business operations. Set up a virtual card number to work at only one merchant, and lock or unlock it at any time. When you use virtual card numbers, if one of those merchants compromises your account, your business can generally continue to run without disruption. The only impacted virtual card number would be the one tied to that particular merchant.

Align business spending and goals

Some banks offer the ability to organize and align spending according to business goals and department budgets with virtual card numbers. Businesses can segment cash flow by assigning virtual card numbers to specific employees, budgets, merchants and more. Instead of opening various business accounts or supplying multiple physical cards, virtual card numbers can provide a simple solution to managing departmental spending and aligning on business goals and driving growth

Create a virtual card with Capital One

Virtual card numbers are an important step in protecting your business’s finances from fraud. Make safer vendor payments and simplify your expenses without exposing your physical card number. Explore virtual card numbers for businesses from Capital One.

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