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The State of Virtual Credit Cards in B2B [2023]

Published on 7 min read

In this blog, we unpack our findings from a survey of 200 finance leaders on the value they see in using and accepting virtual credit cards. We explore:

  • How virtual cards benefits sellers as well as buyers
  • The challenges sellers face in accepting virtual cards
  • Why sellers and buyers are increasingly motivated to increase virtual credit card usage and acceptance
  • And much more
Virtual credit card on a black, orange, and blue background

The popularity of virtual credit cards is skyrocketing, with the global value of virtual card transactions expected to rise nearly 260% percent, from $1.9 trillion in 2021 to $6.8 trillion in 2026.

As 2023 begins, it’s time for business-to-business (B2B) companies to acknowledge virtual credit cards as a strategic lever to make sure they don’t miss out on potential revenue and market share growth, particularly as inflation shows little sign of slowing down.

Sellers have more difficulty accepting virtual credit cards than buyers do in using them, so sellers are at most risk of foregoing business if they don’t get the right tools in place to accept this payment method.

With 55% of CFOs now saying that their teams are more frequently making payments with virtual cards—as a result of digitization trends—it’s clear that buyers are racing forward to adopt this technology.

Sellers should take note: It’s a good time to focus on getting set up to take these payments.

To learn more about the value companies see in using and accepting virtual credit cards, we surveyed 200 finance leaders—using the Gartner Peer Insights Platform—between July 29 and October 20, 2022. The typical respondent was C-suite (70%), working in finance (41%), in North America (70%), and at an organization with 1,000-5,000 employees (60%).

The data helped us understand how virtual cards can benefit sellers as well as buyers, the challenges sellers face in accepting these transactions, and why sellers and buyers alike are increasingly motivated to increase virtual credit usage and acceptance in the immediate term.

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Key findings: virtual credit cards no longer only benefit buyers

The data first confirmed what is already widely experienced by financial teams: The benefits of virtual credit cards skew heavily towards buyers, with virtual cards more convenient for accounts payable than for sellers. To emphasize this, nearly all respondents (98%) recognize that buyers stand to reap significant benefits from making invoice payments using virtual credit cards.

Yet here’s where things veer from the expected.

With a recession looming, businesses are feeling pressure to secure payments quickly and efficiently. This sudden urgency is leading executives to prioritize digital tools that focus on providing better customer experiences (CX) as a means of accelerating cash flow. Virtual credit cards are one such instrument now entering sellers’ scopes. This payment method is increasingly seen as highly valuable, and many sellers are now aware that they should begin accepting them as soon as possible.

Business buyers are increasingly turning to virtual cards to make faster, more efficient payments while giving them flexibility and better cash-flow management. Suppliers are benefiting from these faster payments; however, the increasing volume of these transactions is making automating the receivables even more essential
Colleen Taylor, President, Global Merchant Services – U.S. at American Express

1. Virtual credit cards boost customer experience

The potential for improved CX is a major benefit that sellers identify in accepting virtual card payments:

  • More than a quarter (26%) of respondents were enthusiastic about virtual credit cards’ ability to provide better customer experiences

  • Conversely, 54% reported being at least somewhat concerned that not accepting these payments would mar their customers’ experiences.

It should come as no surprise that businesses that don’t accept virtual credit card payments are less likely to provide good customer experiences than those that do. Unfortunately, many businesses are ill-equipped to meet their buyers’ preferences and it’s showing in their interactions:

  • More than two-thirds (67.5%) of respondents have had to refuse virtual credit card payments, with a third of respondents having done so multiple times. The customers who were trying to make those purchases certainly didn’t walk away happy.

2. Virtual cards offer sellers various benefits

The survey data indicates that sellers perceive virtual credit cards to offer a variety of benefits beyond offering customers excellent experience. Here are some other positives they identify:

  • Reduced risk: With better security options than checks and credit cards, virtual credit cards reduce the risk of fraud. Cutting credit card fraud also reduces associated chargebacks and other fees. Almost one-fifth (19%) of survey respondents said that the security benefits of accepting virtual card payments are particularly appealing.

  • Better customer retention: Buyers are adopting virtual cards faster than sellers, so it’s likely that some buyers will look to do business elsewhere if their preferred providers aren’t accepting this payment option. Losing buyers will impact revenue and growth.

  • Streamlined workflows: For sellers, virtual credit cards are appealing because of the potential for these payments to be automatically reconciled with open accounts and invoices. Nearly half (46%) of survey respondents said that ability is so beneficial that it becomes a major reason to accept virtual card payments.

3. Virtual credit cards offer immense value to buyers

Buyers see benefits of using virtual cards as well. Our survey surfaced some of the most helpful benefits.

  • Controlled spending: Survey respondents are most enthusiastic about the enhanced control over spending that virtual credit cards afford them, with 37% saying they appreciate that functionality. AP teams can set parameters for each transaction with a virtual credit card, which limits how staff can use company funds and improves finance managers’ ability to budget.

  • Supported software integration: Respondents are enthusiastic about virtual cards capability of being supported by their—or their customers’—existing accounts payable software tools. Thirty percent of respondents see this potential integration as valuable and likely to expand buyers’ use of virtual credit cards.

  • Boosted security: More than a quarter (26%) of survey respondents appreciate virtual credit cards’ security profile. Virtual cards can be programmed to block unauthorized usage, and they are often only used for a single transaction. Both features make them less appealing to hackers and thieves. And sellers need not be responsible for storing their customers’ banking data.

  • More convenience: Buyers can transact with virtual credit cards instantaneously, a far more convenient option for buyers than using physical checks. And virtual cards can easily be canceled without the involvement of third parties, making them easier to manage than physical credit cards.

  • Greater affordability: In comparison to checks—among numerous other payment methods—virtual credit cards are a cheaper way to pay invoices, as issuers charge little for services and nothing to create card numbers. Meanwhile, issuing a check can cost as much as $20.

A virtual credit card shown on a web page, with icons floating around it

Want to know more about Virtual Credit Cards?

We cover everything B2B sellers (and buyers) could want to know about virtual credit cards

Learn more

Future of virtual cards: 2023 is the year for sellers despite obstacles

Numerous challenges have kept sellers from moving on virtual cards

Despite all these benefits of accepting virtual cards, only a quarter (24.5%) of respondents have implemented automation technology that allows them to ease the process of retrieving virtual card information; and fewer than that (23%) have implemented automation technology that allows them to apply virtual card payments to invoices.

Sellers’ progress in accepting virtual cards is slowed by a number of challenges:

  • Nearly all respondents (99%) report facing challenges accepting and applying payments made using virtual credit cards.
  • Just under two-thirds of respondents (64%) said that downloading and transforming remittance data into ERP-accepted formats is the biggest impediment to accepting virtual credit cards. They find the process cumbersome and time-consuming.
  • And nearly half have had difficulty applying virtual credit card payments to the correct invoices.

Additionally, CFOs identify numerous reasons for slow uptake of digitization in general, with the lack of an in-house expert and difficulty in finding the right company to work with topping the list. Other factors include not having a fully integrated ERP system and concerns about cost, among other issues.

Despite these obstacles, the detrimental effect of not accepting virtual credit cards can be so pronounced that sellers are moving quickly to become equipped to accept this payment method.

Data reveals the need for more virtual card acceptance in 2023

As virtual card usage continues to expand, we’re seeing increasingly sophisticated options that companies can access to help digitize and streamline virtual card payment processing. Accounts receivable automation vendors like Versapay, for example, can help sellers set up automatic reconciliation and get them up and running quickly.

Getting set up to accept virtual payments as quickly as possible will boost business outcomes for sellers in 2023. Not accepting virtual credit cards can put a dent in revenue: 63.5% of respondents to our survey report having lost business because of an inability to accept virtual cards, and a quarter of respondents have lost business multiple times.

Such losses will only become more common as the portion of buyers who want to use virtual cards to pay their invoices continues to outpace the number of sellers who accept them as a form of payment.

Technology is enabling virtual credit card acceptance

Tech tools are available to ease virtual card acceptance—a boon to businesses. In fact, this technology makes virtual card acceptance as seamless as virtual card issuance, vastly reducing the time it takes to accept virtual card payments.

This digital facilitation can have a great impact. Accepting virtual cards allows businesses to make more sales and pull in more revenue, build better relationships with buyers, and tighten security to reduce risk and fraud.

Businesses should get ready: 2023 and beyond will be a time of fast change in the area of virtual credit card payment and acceptance. Businesses that want to build better relationships with customers and capture a greater share of revenue from a rapidly growing payment channel should work with a technology provider that can make sure they’re poised to take advantage of this exciting change.

Read our report that unpacks our survey results to learn more about how businesses are approaching—and benefiting from—using virtual credit cards.

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