How virtual credit cards are the key to solving your business’s supplier payout pain points
With global travel health now restored and even surpassing pre-pandemic levels in many regions, the industry’s need for payment solutions that can support cross-border payments and a global supplier network is more important than ever.
WeTravel’s 2023 Travel Trends Report found that travel businesses, more than ever, are accepting virtual and local payment methods – highlighting that travelers have begun taking advantage of payment innovations. In contrast, many travel businesses are still relying on traditional payment methods such as wire transfers and bank transfers to payout their suppliers.
While these conventional payment methods may be more established, they are burdened with high fees, weak financial security, long delays and geographic restrictions. Virtual credit cards on the other hand are an efficient digital payment strategy that supports both accepting travelers’ payments and paying out local suppliers, all the while minimizing fees and improving financial security.
Here’s why your business should embrace the technological innovation that’s available and adopt virtual credit cards as part of its suite of payment solutions.
What are virtual credit cards?
Virtual credit cards are simply digital versions of the physical card that is attached to your account. However, the card number, which is digitally generated, is different to the number on your physical card – allowing you to make payments online and in some cases over the phone without revealing the sensitive information on your physical card.
You can create an unlimited number of virtual card numbers from the same account, which may be single-use or re-usable. Maximum spending limits can also easily be put in place, and the virtual card can still be terminated at any time at the click of a button – without having to go through traditional banking channels.
What are the benefits of using virtual credit cards?
The core benefit of virtual cards is greatly increased financial security. However, for businesses, virtual cards also support improved cash flow, easier tracking and reporting, reduced fees and greater efficiency. For travel businesses making B2B payments, these benefits increase exponentially, being used both to pay suppliers and provide access to funds for on-the-ground staff such as tour operators.
Virtual credit cards allow:
- Increased control and reporting. Each time you need to pay a supplier, you can create a virtual card to do so. The card number will be unique to that supplier or specific payment, which gives you complete transparency tracking your payments and enables hassle-free reporting.
- Increased financial protection. Due to the unique nature of each randomly generated virtual card number, the risk of fraud is greatly reduced. If you ever have reason to believe your card details have been compromised, simply delete the virtual card and create a new one, instantly.
- Greater efficiency. Much faster than wire transfers or bank transfers, using virtual cards for your B2B payments allows you to pay suppliers more efficiently, undoubtedly strengthening your business’s supplier relationships.
- Improved cashflow. Many virtual cards also allow you to set payment dates to release funds automatically on specific dates, meaning you can keep cash in your business for longer.
- Higher profit potential. Say goodbye to paying wire and international bank transfer fees, and pay with your virtual card instead. In many cases, you can choose to pay your suppliers in the currency that they use, meaning you can also do away with paying high foreign exchange (FX) fees. However, you will still pay credit card transaction fees, though.
- Less admin. Removing the need to go into your bank to initiate transfers or wires, as well as cutting down on the paper trail of expenses tracking, virtual credit cards will cut down your business’s admin time, ultimately contributing to an improved bottom line.
While virtual credit cards offer benefits for all travel businesses, travel advisors and agencies who collect payments from a client and then pay each supplier for the services included in the trip – from airlines to hotels to tour operators – have the greatest rewards to reap. For travel professionals using this model, known as the Merchant of Record (MoR), virtual credit cards are the perfect solution.
How can you integrate virtual credit cards into your business’s payment network?
With an increase in local payment methods being noted industry-wide as well as markets emerging in new destinations, travel businesses need to ensure that they utilize a variety of payment solutions in order to meet the demands of their suppliers and clients. A suite of solutions is key to ensuring your business can operate without friction across a global payment ecosystem.
A virtual credit card, such as the WeTravel card, can be seamlessly integrated into your business’s existing payment flow and provides a solution to paying suppliers of any size and in any location. This is especially relevant for travel advisors who work with airlines, hotel chains and other large-scale tour companies. Utilizing virtual credit cards allows you to securely and quickly pay these suppliers, all the while minimizing costs and ensuring a visible payment trail that can be referred to in the event of cancellations or chargebacks.
The moment a travelers’ payments clear, the funds are available for transfer to your WeTravel card. With the peace of mind of chargeback protection as well as improved security, this virtual payment solution not only keeps your WeTravel balance safe but lowers transaction costs.
Moving away from the traditional systems that your business may currently rely on could be an overwhelming thought – but optimizing your business’s payment systems is the key to growth. Virtual credit cards are already proving to be a key way to improve profitability as well as minimize friction across the payment journey between businesses and suppliers. By adopting virtual credit cards as part of your business’s strategy now, you’ll ensure that you can maintain excellent relationships with your suppliers, maximize profits and speed up the payment process.