Why virtual credit card acceptance is critical to customer retention

Barrett Smith is the Chief Payments and Customer Operations Officer at Versapay

Virtual credit cards are quickly becoming a key part of the B2B payment industry. In fact, the North American virtual card market is expected to grow 24% annually, hitting $694 billion by 2026. Our research also shows that 78% of buyers anticipate using virtual cards more frequently next year.

While these cards make life easier for buyers, they can create significant challenges for sellers who accept them. It’s important that sellers weigh the extra work associated with these cards against the impacts of rejecting a customer’s preferred payment method.

But first, a quick refresher on virtual credit cards. A virtual credit card is a digital payment method intended for online and card-not-present transactions. It’s an automatically generated 16-digit card number used in place of the physical credit card number it’s associated with.

There are a few reasons why buyers are flocking to virtual cards. First, they allow buyers to manage risk and control large vendor spending by creating merchant-specific cards. That means less worrying about overspending. Second, they can be created nearly instantly, so businesses don’t have to wait for a physical card to be created and delivered to their employees. Finally, virtual cards can be limited to a single use, making it extremely difficult for them to be misused in unintentional or malicious ways.

With virtual credit card payments, remittance information tends to arrive in an array of formats, often in the body of emails. Accounts receivable staff then must manually input that information into their enterprise resource planning system—a tedious, time-consuming, and error-prone process.

Still, choosing to not accept virtual credit cards can be a significant mistake regardless of how much extra time they take to manage.

In our personal lives, we all find it frustrating when a business won’t accept the method you want to pay with. B2B transactions are no different. 80% of buyers we spoke to prefer working with sellers who accept virtual card payments. And even more critically, 59% of buyers stated that they’d consider selecting (or switching to) a competing vendor because of their ability to accept virtual credit card payments.

Imagine putting in all the work it takes to acquire and onboard a customer, only to have them leave because you make it difficult for them to pay. Retention is critical in times like these, and accepting virtual credit cards is a powerful way to boost it.

Put simply, choosing not to accept virtual credit cards is choosing to give buyers a reason to take their business elsewhere.

The good news? Like many other parts of the invoice-to-cash cycle, virtual credit card acceptance can be automated. To understand this, let’s look at where virtual cards create the most pain for sellers and how automation can relieve them.

Because virtual cards often result in remittance information arriving in multiple formats, accounts receivable teams must manually search for and input that data. It’s not just time-consuming; it’s also inaccurate. Automation can take this off a seller’s plate by instantly extracting remittance and virtual credit card number details from the virtual card issuer portal.

Another major cause of friction, as mentioned above, lies in taking that data and inputting it to internal systems. It’s nearly as time-consuming and error prone. With automation, this information is uploaded automatically, cutting down on valuable time used and costly mistakes.

Ultimately, for sellers who choose to accept and automate virtual credit cards, it’s not just an added benefit: it’s a competitive advantage. Accounts receivable is rarely looked at as an opportunity to get ahead of competitors. This capability changes that, all while creating happier customers who are more likely to continue doing business with you.

Time is of the essence, and the sooner sellers begin accepting and automating this game-changing payment method, the sooner they can unlock a critical edge.