What Features To Look For in a Virtual Debit Card [Guide]
by Maddy Osman
Empowering your employees with a company credit, debit, or virtual debit card can streamline tasks like paying merchants. However, are your traditional corporate cards credit and debit cards inadvertently increasing your workload?
Issuing company cards can turn your month-end close into an accounting nightmare. You have to chase down receipts and match them to autonomous transactions, then make sure you categorize every transaction correctly on your general ledger.
Ultimately, traditional company cards give you little control over how your employees spend. You can only catch unauthorized transactions after the fact when you’re reviewing your statements.
Choosing a virtual debit card (or virtual credit card), on the other hand, gives you the benefit of empowering your employees without the added accounting hassle. Plus, you have more control over how money is spent.
Expert Advice: How To Choose a Virtual Debit Card for Your Business
Keep reading to learn more about:
Virtual card services 101
Benefits of using a virtual debit card
What to look for in a virtual debit card
Final thoughts: What features to look for in a virtual debit card
Virtual Card Services 101
Online banking works the same way as traditional in-person banking, except you communicate with your bank through its website or mobile app. Not only can you handle deposits, payments, and withdrawals online, but you can do it without a physical debit or credit card.
Virtual cards, also known as electronic cards, are bank cards stored in a digital wallet or bank app. In other words, they work the same as a debit or credit card, but they’re entirely digital. You don’t have a physical plastic card.
Virtual Debit Card
A virtual debit card works the same as a traditional debit card, except it exists entirely on your phone and is accessed via bank and payment apps. Your bank will issue a virtual card number that can be used for online purchases or contactless payments where you hold your cell phone up to a card reader.
Virtual Credit Card
You access a virtual credit card the same way as an electronic debit card — through your mobile device banking app. To use a virtual credit card, you must be approved by your bank first. However, once approved, you have instant access to your card. There’s no waiting around for a physical card to arrive in the mail.
Benefits of Using a Virtual Debit Card
One of the benefits of a virtual debit card, as opposed to a virtual credit card, is that the qualification process is instant, and you aren’t subject to the stringent financial requirements of a credit card.
Using a digital debit card for your business comes with several attractive benefits. They are the following:
One of the main benefits of choosing a virtual card is added security. Virtual numbers can’t be used to trace back to your bank account or credit card information, so they’re much safer.
If you want to maximize your fraud protection with a virtual payment card, you have the option to issue single-use authorization codes to prevent fraud during checkout. It’s like adding two-factor authentication to your digital card and ensuring only the assigned cardholder can complete transactions.
Alternatively, you can get a temporary card number for online transactions instead of using your bank account numbers.
The temporary number can be set to stop working after a single transaction goes through — or, however many transactions you specify. So, even if someone manages to steal your payment details, they can’t use those card details for additional purchases.
Ease of Use
Virtual debit cards are easy to use for online payments or with your mobile device. Even better, it’s easier to create a new virtual card than to request another physical debit card from your bank. Once you create a new card, it’s available instantly.
Unlike conventional cards, virtual cards give you the ability to set spending limits on each card. With spend limits, you can prevent unhappy surprises during your month-end close. Furthermore, setting limits for each card sets a limit on your card in case of fraud.
Some virtual card account services even let you control where each card can be spent. For example, you can generate a card number that can only be used to pay certain vendors.
The Plate IQ Visa debit card updates you with real-time transaction notifications, so you know exactly when payments are made.
Virtual payments typically include automatic accounting sync to minimize manual data entry. When you get to your accounts payable review, your virtual card service lets you know what’s already been paid.
What To Look For in a Virtual Debit Card
More businesses are turning to virtual card services to handle their corporate cards. If you’ve decided to move to virtual payments, the question becomes, “How to choose the right card?”
Many financial services companies partner with FDIC-insured credit card providers like Visa and MasterCard to offer secure and protected virtual cards.
Once you’ve determined that a provider offers a secure card, compare customization options and additional features to find the best fit for your business.
Here are a few things to keep in mind when choosing a virtual card.
Ease of Issuing Cards
In general, issuing virtual debit cards is more straightforward than requesting physical bank cards or applying for new credit cards. However, make sure that you can fully create your account online.
Some providers may limit the number of cards that you can issue. It’s best to choose a service like Plate IQ that lets you issue as many cards as you need.
Finally, look for a provider that can issue physical cards for employees that need them, such as delivery drivers.
Flexible Spend Control Options
When it comes to virtual debit cards, there are three main types:
- Single-use/burner cards
- Subscription cards
- Reloadable prepaid cards
Look for a virtual debit card that lets you issue all three types of cards.
Plate IQ lets you issue debit cards by vendor or category if you want even more spending control.
For example, you can issue a credit card to your bar manager that can only be used with beverage vendors.
Alternatively, you can use Merchant Category Codes (MCCs) to customize spending control for a virtual debit card.
Accounting Sync and Automatic Spend Tracking
Not only are virtual cards more efficient than traditional credit cards, but they can also help you streamline your accounting process.
For easier transaction reconciliation, look for a provider that lets your employees upload receipts and matches them to the transaction.
Card providers like Plate IQ use AI to map each transaction to the proper GL category automatically.
If your business expenses include fuel, make sure your virtual debit card app includes automatic mileage tracking.
Integration With Your Existing Software
A virtual debit card can only ease your workload if it integrates with your existing software. In particular, make sure that your card issuer works with any accounting or financial tracking software you use.
Plate IQ integrates with Intuit QuickBooks and other top hospitality management platforms.
Support for Employee Reimbursement
Finally, select a card that works for you and your team. If you have an existing employee reimbursement program, choose a virtual card that works with your system.
The Plate IQ card supports external card programs and lets you review and reimburse cash expenses through direct deposit or transfer money with a virtual card payment.
Final Thoughts: What Features To Look For in a Virtual Debit Card
Advances in digital banking have reshaped the way businesses think about corporate cards. Opting for a virtual debit card gives you much more control over where your money goes.
Furthermore, virtual cards can be issued quickly and offer more security benefits than a physical bank card.
Explore the Plate IQ virtual card for your business today and discover a card that’s flexible enough for your business and works with your existing accounting systems.
Maddy Osman is a writer and entrepreneur who writes about B2B technology at The Blogsmith, a research and content agency. To learn more, visit TheBlogsmith.com.
Stay up to date on the latest news in AP automation and finance