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Virtual cards: it's not as difficult as you think

Updated: Mar 27

Why do you want to use a virtual card?

There are multiple scenarios for utilising virtual cards to simplify your purchase processes for products and services that demand immediate online payments. The two types of cards - single- and multi-use - can appear limited in their uses at first glance, the former for webshop purchases and the latter for paying for subscriptions. This article will present a myriad of opportunities for online purchases for the two types of virtual cards that can usually be requested according to your organisation's account configuration. After all, using virtual cards to deal with different ad-hoc expense situations is meant to give you freedom in planning expenses, provide a simple overview of payment statuses and transactions, eliminate card misuses and risks from online purchasing, and simplify the payment process so that you can focus on the key tasks of your everyday work.

Mobile virtual card

And last but not least, using virtual cards helps you sidestep situations where employees use their private credit cards to make corporate purchases that lead to unexpected expense claims at the end of the month.

A new era of payments

Virtual cards are quite new in the purchasing space, and you may have many questions about their attributes and rules of use. To address those potential questions, we think it is necessary to create a solid point of reference and put minds at ease. We're not talking about virtual cards in terms of how they are set up in relation to your organisation's payment policies since each has its own.

We are specifically addressing the attributes of a virtual card and how you as a Requester perceive them when considering your expense opportunities through online payments. In this article, we are specifically comparing virtual cards to classical credit/debit cards in online purchasing scenarios. So let's demystify virtual cards and open up opportunities for their use.

What are virtual cards exactly?

To put it simply, virtual cards are just regular credit cards without a physical representation. The general idea behind a payment card is that it references an account of/in its issuing bank. A classical plastic payment card is, therefore, a medium for conveying payments using the technologies available to communicate a transaction to a bank using the capabilities of its physical format (a magnet strip, chip, or NFC/contactless). However, thanks to advanced and widespread payment technologies, plastic payment cards have become simple text and numeric information carriers in online payment scenarios.

Paying with a credit card for an online purchase
online card payment

Think back to the last time you made an online purchase using a physical card. You took the card out of your wallet, typed the card number, expiration date, and CVC code into the online payment form, and then put the card back into your wallet. Building on this scenario, a payment card can easily be used for online payments without it having a physical body. And most of the time, online payments are completed in a situation of Card Not Present (CNP) as long as the user stores the card information on another (secure) medium and has the means to authenticate the transaction. That is where virtual cards shine.

Extra payment security

Therefore, a virtual card has the same capabilities for online purchases as a classical card, and that is how the comparison should be perceived. Think of the ways that you use and have used your personal credit card as a consumer.

With a virtual card, the only difference is that

specific security and audit measures are in place for your organisation's benefit and to promote accountability and ownership for expenses. All without robbing you of the options for using virtual cards.

When you make a request on a platform like Mazepay, a virtual card is issued to your name from your organisation's bank account to fit the purpose for which you have requested it. You will be issued a card with a spending (amount) or usage (number of uses) limit. This means that although you can use the virtual card in most situations as a normal, physical card, the virtual card received is limited to the specific purchase that you are making. This entails that it cannot be reused for other purchases, topped up with additional funds or used again in case you return the purchased goods. For example, you've requested a refund from a supplier for the wrong order. While the virtual card accepts refunds, it is credited to your company's bank account and does not become available as a usable balance for you, nor does the refunded amount restore your spending limit. Virtual cards, even expired, can still accept refunds because they will always refer to a servicing account in your organisation's bank. In the end, if you need to re-order the correct product, you have to make a new purchase request.

Two types of virtual cards

The main distinguishing rules for the two types of virtual cards are that a single-use card is meant for one-time use, whereas a multi-use card is meant for recurring payments from the same supplier. Relating to the attributes of both card types, the card number loses its validity after it has been used, once or until the spending limit has been reached through multi-use payments. Keeping these simple distinguishing rules in mind, the opportunities for requesting different virtual cards for different online purchase scenarios now seem limitless. For one, using a multi-use card to pay for a software subscription is only one use case. Next, we'll overview the different methods for using single- and multi-use virtual cards. Then, we'll present popular use cases to get you inspired for your next online purchase using virtual cards from Mazepay.

Single-use virtual cards

With Mazepay, you can make online purchases anywhere that accepts Mastercard. When it comes to the two different types of virtual cards, you can utilise them in multiple ways.

The most popular use cases for single-use virtual cards are, of course, webshop purchases. But to give single-use cards more reach, they also have a place when paying for subscriptions. For example, requesting a single-use virtual card to pay for an annual subscription would be the way to go if you know that this is a subscription you'll often use for the entire time. Plus, there is a cost-efficient upside to paying for an annual subscription with a single payment. Also, you can request a single-use virtual card to pay for a monthly subscription if you know that you only need it for a month and/or if a subscription is expensive enough that resubscribing requires a monthly assessment. In this case, you'd be better off requesting a new single-use virtual card each month. Sometimes you just have multiple active subscriptions, and you could do with a healthy reminder when it's time to renew. Forgetting a subscription, especially an expensive one, negatively affects your company's finances, and software service providers don't always send you notifications about upcoming charges.

Multi-use virtual cards

A multi-use card makes the most sense if you have a fixed monthly subscription or a flexible recurring variable amount with the same supplier. A fixed monthly subscription is the most common use case, but there are multiple options to make your life easier when it comes to recurring payments. For example, if you have a monthly or yearly budget for maintaining office facilities and you have one or many different suppliers that you use for that, you could just request a multi-use card for each subscription.

That way, you'll avoid requesting virtual cards one at a time for purchases that you know are already approved in the budget. This way, you can stay organised by having easier access and an overview of your budget spend for each vendor. Each virtual card's transactions are conveniently listed with their respective purchase orders. For multi-use cards, you should request the total amount of a subscription over a 1-year period or the total amount of a budget if it is a recurring payment.

Use cases

To help you get inspired for your future purchases online using Mazepay's virtual cards, below, we'll present the non-exhaustive list of the most popular use cases from different purchase categories. We hope that by applying the knowledge we've shared in this article, you can more easily start planning your next webshop purchase, short- or long-term subscription, or set up a new recurring payment with a variable expense amount.

  • IT: Software licenses and subscriptions, hardware, networking, storage.

  • Marketing expenses: Ads and content promotion, software subscriptions, brand accessories, digital marketing tools, print media and other physical promotional materials.

  • SaaS subscriptions: Many examples of software as a service are recurring payment based.

  • Travel and transport: Many travel and transport applications and websites exist. All of them accept online payments. You can utilise that to plan your business trips smarter and use the right type of virtual card. Do you use a specific ridesharing or commuter app? Request a multi-use virtual card and link it to your account.

  • Event tickets: Use a single-use card to buy conference tickets in bulk or a multi-use card if you're buying them one by one from the same online platform.

  • Office supplies; Laptops, phones, furniture, office electronics, paper, whiteboards, pens: Some office supplies you need to restock monthly or weekly and some you need less frequently. Use multi- and single-use virtual cards to address the different respective buying scenarios.

  • Office management: Catering subscription, restocking drinks and snacks, health and safety supplies, hygiene and cleaning tools or services, plants, and decorations.

  • Professional services: Freelancers, GDPR compliance tools, legal and financial advisors, physicians, and massage therapists.

  • HR: Flowers and gift baskets, training courses and e-learning, recruitment agencies, events and social activities, registrations for employee sporting events, and employee gym subscriptions.

  • Insurance premiums: Usually, we pay a yearly or quarterly fee, so they act as a subscription.

  • Parcel shipping/courier services: A good example of several transactions from the same supplier. The reimbursement arrives in the company account in case of lost packages.

  • Phone and data plan bills: One of the most common recurring payments, one of the first subscription-based products.

  • Virtually any department which needs to make ad-hoc purchases in various amounts.

What's next?

You now have a better understanding of virtual cards' attributes and the different opportunities for their use. If you want to know more about online purchases or subscription management, follow the links below:

If you are interested in how to incorporate the use of virtual cards into your enterprise, reach out to us and book a demo.


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