When is the best time to use a virtual credit card?

woman holding and using a mobile phone

As your company grows, you’re going to have more and more employees that need access to a corporate card for their purchases. Issuing virtual credit cards is one way to ensure that employees can pay for online purchases without having to give everyone a plastic corporate card.

Virtual cards give an employee a credit card number and its associated credentials and can be great options for businesses that make a lot of online purchases. There are going to be different kinds of situations that are great for using a virtual credit card depending on what kind of company you are. 

Ecommerce companies might use them for recurring services like Shopify while putting server bills on a credit card would be an excellent option for startups. Life Sciences companies may have a totally different set of needs. Managers might even be more thankful that they won’t have employees asking for the corporate card for every online purchase. 

And you certainly don’t want everyone paying for things on their personal cards and having to reimburse them at the end of the month.

When should I use a virtual credit card?

The short answer is any online purchase is a great use case for a virtual credit card. But you might not want to create a card management nightmare by issuing dozens, or hundreds, of virtual credit cards for every unique vendor. While they may be straightforward to manage, you can quickly overrun your company with virtual credit cards as you might do with regular credit cards.

You still want to follow the same kind of accounting hygiene you would work with regular corporate credit cards, but certain areas are great candidates for virtual credit cards — especially if they are just for significant one-off expenses or recurring, predictable expenses. Here are some examples:

  • Paying for monthly software and services like G Suite, Slack, or other business tools. You can create a virtual credit card designated for paying for online business software subscriptions. That’s going to be a constant recurring expense, so it might make sense just to set it and forget it.
  • Simplifying your expenses by using separate cards for separate functions. If you have dozens of employees, you probably don’t want everyone flooding their costs onto the same credit card. Segmenting out your internal divisions with different virtual cards can make it easier to oversee expenses.
  • Paying for a major team event or outing. If you want to rent out a venue that takes credit cards, it might make sense to spin up a virtual credit card for that transaction. Then, once everything is paid for, you can just shut that card down and never worry about any theft or fraud.
  • Working with consultants or firms. You might consider giving a firm that you are working with that might require online purchases access to a virtual credit card that you can shut down at any time.

Are virtual credit cards secure?

The website that’s taking your credit card information is probably taking good care of it and protecting you from fraud. However, online transactions have an extensive surface area for theft and fraud. You might end up on a page that looks identical to a checkout page for one of your most-visited online stores that’s actually a fake page that will take your credit card information.

You’ll have to watch out for different kinds of tactics for credit card theft and fraud. It’s really the same principle as protecting any other online account. Carefully monitor the web URLs when you are inputting your credit card information. Make sure everything is going across a secure channel, and you aren’t just texting someone a card number. And always be on the lookout for phishing attempts in your email, which can be incredibly sophisticated these days.

But one of the main benefits of virtual credit cards also ties into the notion of being cautious about fraud: you can quickly shut them down and open a new one without too much trouble. When losing a physical card, you might have to wait a while for a new one to arrive before you can start making online purchases. You can issue a virtual credit card right after shutting down the old one without too much trouble.

Find out more about how virtual cards work on the Brex Learning Center.

Photo credit: Priscilla Du Preez on Unsplash

Related Articles

blog footer
Why net-60 terms help in ecommerce advertising and marketing
blog footer
Why ecommerce startups should use virtual credit cards
blog footer
How to think creatively about ecommerce product packaging
blog footer
How to define churn for your ecommerce startup