Accepting Virtual Credit Cards: What Businesses Need to Know

Accepting Virtual Credit Cards: What Businesses Need to Know

As digital payments become more sophisticated, virtual credit cards (VCCs) are growing in popularity, especially among consumers and businesses concerned about security and control. If you’re running a business, understanding how virtual credit cards work is becoming more important than ever.

In this post, we’ll break down what virtual credit cards are, their pros and cons, and how you can streamline the acceptance process.

What Is a Virtual Credit Card?

A VCC is simply a digital version of a physical credit card. It works the same way as plastic cards and is typically used for online, email/electronic invoice transactions, or stored within a customer’s digital wallet. Issued by a bank or card provider, a VCC generates a unique card number that is tied to the user’s actual credit account but can be set with specific parameters. These parameters enable the cardholder to set a maximum charge amount, create an expiration date, or even set it for a one-time use.

Virtual Cards are most popular for:

• Online purchases
• Insurance or healthcare payments
• Business-to-business transactions

Benefits of Accepting Virtual Credit Cards

1. Supports a growing payment method

Many corporate buyers prefer to use VCCs. In fact, virtual card usage in North America is expected to hit close to $700 billion by 2026. Accepting VCCs will address the preferences of your digital-savvy, security-conscious customers.

2. Secure Transactions

Virtual cards offer enhanced security. Since the numbers are often single-use or short-lived, they’re nearly useless if stolen or intercepted.

3. Fewer Fraud Chargebacks

Because the issuing bank and/or customer sets limits on use (amount, time, even merchant), fraudulent use is much harder—meaning fewer disputes.

Potential Challenges of Accepting Virtual Credit Cards

1. Manual steps may be required in some instances

VCCs are often delivered via email to a secure portal. Processing of such cards can require merchants to log into a secure portal to access the card information then key it in manually to their systems. This is a slower process and can be more prone to entry errors.

2. Need clear remittance data for easy reconciliation

Payments made via virtual cards can be hard to reconcile if there’s no clear remittance data. This can be especially challenging in situations where payments are tied to an invoice number or patient ID. When these situations occur, you’ll likely need to contact the virtual card issuer to get additional details or enroll in secure acceptance so the additional details can be passed.

3. Refund process will need to be expanded to accommodate VCCs

Issuing refunds to a virtual card that’s expired or deactivated can require additional steps or delay the process for the customer. If the VCC is expired, you may need to issue a refund via check.

4. Surcharge program, communication

VCCs are often issued with a set limit, which can be exceeded if a surcharge is added to a transaction. Some businesses have overcome this challenge by adding the surcharge amount prior to invoicing the customer.

Preparing to Accept VCCs

Train Staff on Manual Entry Procedures

Understand which delivery channels your customers use to send VCCs. Then train your staff to efficiently verify the payment information and carefully enter those details within your payment system. Some VCC issuers have integrations with payment gateways or software, which allow the incoming payments to automatically be accepted.

Clearly Communicate Refund, Surcharging, and Acceptance Policies

Make sure customers understand how virtual cards work with your business and maintain a clear and flexible return process to handle exceptions.

Maintain Documentation

In the event of a dispute, having clear, timestamped records of transactions (including delivery confirmation and customer communications) is crucial.

Final Thoughts

Virtual credit cards aren’t just a trend—they’re a growing part of the modern payment landscape. For most businesses, the benefits outweigh the challenges, especially when you take the right steps to streamline the process. Accepting VCCs can enhance customer trust, reduce fraud, and streamline operations. By investing in the right technology and training, you’ll position your business for long-term success in an increasingly digital marketplace.