This article was originally published on 14 May 2021 and updated with clarifications about using the OCBC Virtual Purchasing Card.
In the last decade, the use of cashless and contactless payments has gained momentum in both the consumer and B2B space. According to research by the Mercator Advisory Group, the adoption rate of virtual purchasing cards among companies is expected to grow at 40% over the next 4 years.
In efforts to provide more comprehensive digital payment solutions to business banking customers, OCBC Bank recently announced that it will be partnering Visa Commercial Pay mobile solution to offer a virtual purchasing card.
What Is A Virtual Purchasing Card?
As suggested by its name, virtual purchasing cards are digital-only cards, and do not come in a physical card.
Using a virtual purchasing card enables businesses to digitalise and streamline their payment processes, while providing real-time visibility on employees’ spending as well as captures data to automate the reconciliation process.
For example, the OCBC Virtual Purchasing Card features two types of B2B payment solutions – the Visa Commercial Pay B2B and the Visa Commercial Pay Travel.
The Visa Commercial Pay B2B allows businesses to generate unique virtual card numbers with pre-defined control perimeters (eg, pre-set spending limits or usage of the card on specific categories of goods and services) and customised data fields for each invoice payment to their suppliers.
The Visa Commercial Pay Travel allows companies to centrally manage their business travel spend, such as air travel, hotel and vehicle rental. This solution provides businesses with full visibility on the traveller’s data, transactions and is also able to automate expense reconciliation through the use of unique virtual card numbers per transaction. Travellers can also view and keep track of their travel expenses via the Visa Commercial Pay mobile app.
Benefits Of Using A Virtual Purchasing Card?
While virtual cards are not new to the market, the efficiency and flexibility they provide have increasingly enticed more businesses to adopt such contactless payment methods.
Some features that make virtual purchasing cards more appealing as a payment tool compared to a traditional corporate credit card or personal credit card include:
#1 Replacement of Manual Reimbursement Processes
The process of manual reimbursement can be a hassle for both employers and employees. When employees use their personal cards to pay for certain corporate purchases and seek reimbursements thereafter, it requires businesses to have to process such payment and employees to safeguard their receipts or lose out. Moreover, physical copies of such receipt may also have to be stored for a certain period of time.
A virtual purchasing card streamlines this process and provide a user-friendly alternative that saves time on both ends and allow employers and employees to invest the time needed for manual reimbursement processes into other tasks.
#2 Instant Issue Of Virtual Card(s)
Another benefit of using virtual purchasing cards, such as the OCBC Virtual Purchasing Card, is that employers can instantly issue them to both employees and non-employees for business purchases, which brings great convenience to business.
The application and issuance of a traditional commercial card, on the other hand, typically takes weeks.
#3 More Flexibility In Terms Of Setting Control Perimeters
Virtual purchasing cards typically offer much more flexibility compared to the traditional commercial cards.
For instance, employers are able to issue single-use virtual purchasing cards in addition to recurring-use ones. Employers are also able to pre-set spending limits, validity periods and limit the usage of the virtual purchasing card to certain categories of goods and services.
If a virtual card is issued for the F&B and transport allowances, such as for employees working overtime or have to travel for business reasons, they cannot then use the card to purchase a laptop or spend in other expense categories.
It’s true that traditional corporate credit cards can already provide fixed spending limits. However, they are that generally at higher levels, with a validity period that usually spans several years and are automatically renewed. Physical card holders are also able to use these cards to make any purchase and businesses would typically only be privy of such purchases when they process payments at the end of the month.
The usage of virtual cards, in this case, could help companies control the way they want to provide spending benefits, and reduce instances of misuse of funds.
#4 Better Security Compared To Physical Corporate Credit Cards
Businesses are subjected to potential fraud risks when they use traditional commercial cards as card details are exposed to employees and merchants.
With a virtual purchasing card, employees and merchants are not able to see the card details when they use the card to tap and pay via contactless payments.
For businesses that only require employees to make periodic online purchases, in which case employees would require card details, employers can still mitigate the risk of fraud by issuing the employee with a single-use virtual card.
9 In 10 Visa Transactions Are Contactless Payments
While there will be some businesses that have yet to adopt contactless payment options, the vast majority are. In fact, 9 in 10 Visa transactions in Singapore today are already contactless.
Contactless payments are accepted in many merchants across a variety of spending categories including public transportation, groceries, restaurants and quick service restaurants, convenient stores, fuel stations and more. These are categories that businesses also tend to reimburse their employees for.
OCBC Virtual Purchasing Cards can either be used at merchants/suppliers who accept Visa cards for payment remotely (such as e-commerce/online transactions, Mail Order, Telephone Order or where merchants punch in the card numbers), and brick-and-mortar stores where the POS terminals accept contactless payments (by adding the virtual cards into mobile wallets).
How To Get A Refund After Using A Single-Use Virtual Purchasing Card?
Single-use virtual purchasing cards are useful when you are required to provide employees with a card number to make a transaction, such as for online spending.
In such instances, the card number is no longer valid after making the purchase. You may think that this would pose a problem for getting a refund. However, this isn’t true. Even though the card number no longer exists, merchants/suppliers can still make refunds to the virtual card similar to how they would perform a refund to a physical card. Such refunds will automatically be reflected on the statement for the main card number.
Need Financing Support During This Period?
From now till 31 July 2021, SMEs can enjoy extra financing support of up to $3 million through the Temporary Bridging Loan Programme and enjoy 50% off your facility fee when you apply online with OCBC. Terms and conditions apply.
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