Why the time is right for Virtual Card Numbers in Corporate Payments

VCNs are a commercial payments solution revolutionising corporate payments, most notably in business travel.

With leading VCN suppliers such as ourselves, Citibank and Travelport reporting triple digit year-on-year percentage increases in transaction volumes, it is a popular and fast growing payment method.

Yet our research shows that there is still an addressable market of $810bn for the VCN. We have much more to gain from the VCN in 2016.

Professionals in the world of corporate payments are increasingly demanding flexible, secure and convenient ways to make payments. A combination of a fear of fraud and a desire to streamline corporate accounts means that banks have to start thinking about how they meet these demands.

In this article, we will explore how the VCN has impacted upon the travel industry and why they are now breaking out into the wider payments and FinTech world before examining the benefits for both customers and banks.

What is a VCN

The term ‘virtual’ can be misleading. A virtual card number is a normal 14, 15 or 16-digit card number which banks issue from their standard Bank Identification Number ranges.

Just like physical payments cards they also carry an expiry date, the cardholder name and a three or four digit CVV or security code. However, instead of being stamped physically across a plastic card, the number is:

  • Generated digitally at point of sale
  • Used for that single payment only.

 

VCNs don’t look any different to merchants and are processed as standard Cardholder Not Present transactions. Restrictions can be placed on how the VCN is used — including the merchant category code, amount and date range in which the VCN can be charged.

A traditional centrally billed account has just one card number which is used over and again for multiple payments, made by multiple employees to multiple different suppliers, which poses a major security risk. With VCNs, a unique, one-time card number is generated for each transaction but all the numbers are billed back to the same account.

How the VCN works for corporate payments

Employees have to make corporate purchases regularly. For obvious reasons, not every employee has a company charge card. This means that most employees have to pay for purchases themselves and then claim back on expenses. It’s an inconvenience for the employee and time consuming for the accounts payable departments who have to make the payments and reconcile against cost centres.

Here is an example of how a typical purchase works with a VCN.

1)      The buyer chooses the office supplies on a retail website and proceeds to payment.

2)      The buyer goes to the VCN section on your bank’s website. A screen pops up on which they enter the name of the supplier, the amount to be paid, the date parameters and an unlimited number of additional company information fields, such as project number, cost centre and general ledger code. These are completely customisable to your company’s requirements. In less than one second, your site generates a VCN and a CVV number. This number is randomly generated so cannot be anticipated. For added security, it can be restricted to a particular date range, location and type of spend such as “printer cartridge”.

3)      The buyer enters the VCN and CVV number on the payment page of the retail website, and payment is completed.