When it comes to claims remittance and other B2B transactions, virtual payment benefits surpass the benefits of traditional methods such as checks, ACH, and wire transfers.
Using cards as a form of payment is a part of everyday life. Look around: credit cards, account-linked debit cards, reloadable debit cards, gift cards, and more – cards are ubiquitous. According to the MasterCard® “World Beyond Cash” survey in 2012, 73 percent of Americans said they use less cash than they did 10 years prior. Whether they’re for personal use or for business, card payments are here to stay. One method that is making waves in the professional setting is the virtual card.
What is a virtual card payment? At its simplest, a virtual card payment is a way to deliver a payment without a physical card. Like a credit or debit card, they have a unique 16-digit number, an expiration date, and a three or four digit CVV (security) number; in addition, they can be linked to the payer’s bank account or a line of credit. Due to their low cost for payers and increased security features, virtual payments are replacing checks and other electronic forms of payment more and more each day.
For payment administrators, the low cost of a virtual payment system is one of the biggest benefits, as is the ability to pay invoices and claims more efficiently. However, when it comes to virtual payment benefits, there are a few that payers may be unaware of: reduced exception processing, increased visibility, and decreased fraud.
3 Virtual Payment Benefits You May Not Know About
Reduced Exception Processing
Exception processing happens from time to time, and when it does, it effects everyone in the chain. For payers, a stop payment costs them time and money rectifying the problem. For billers, whether they’re the service provider or other entity, it affects their cash flow.
A common reason for exception processing with wire transfers and ACH is inaccurate/incomplete account numbers. A virtual payment cures this because the payer does not need the service provider’s account information to deliver remittance. The person enters the single use card number into the point of service terminal, along with the other payment information, and the funds are delivered to the bank account registered to the terminal.
In addition, with a virtual payment, the payer sets the payment amount, and the account will not process for any more or less than the entered amount. This nearly eliminates short or overpayments, keeping the process running more smoothly.
Increased Payment Information Visibility
Keeping track of remittance information can be quite time consuming. With checks, the payer has to manually keep track of all the information. ACH and wire transfers only allow a limited amount of characters (ACH is 80; wire transfers are 140) with which to enter information.
Depending on the payment processor, payers could access 10 or more different payment information fields in which to enter reconciliation data. This could include biller information, invoice numbers, dates, payment amounts, etc., all of which help reduce the time with manual payment reconciliation and enable the payer to enter as much data as necessary.
Check payments are extremely susceptible to fraud and are the payment method most targeted by thieves. According to the 2016 AFP Payments Fraud and Control Survey, 71 percent of companies that experienced payment fraud were victims of check fraud. In 2013, fraud against bank accounts cost $1.744 billion dollars, according to the 2013 ABA Deposit Account Fraud Survey.
Unlike checks, ACH, and wire transfers, virtual payments do not require the transfer of sensitive banking information for either the payer or the service provider. The virtual card number is single use, rejecting unlimited attempts at claims, and many payment processors deliver all the payment information through a secure online web portal, eliminating mail theft. In order to retrieve the payment information, service providers use their personal login to get into the portal.
As payers need more than just low cost from their payment solution, virtual payment benefits excel where other methods do not. Virtual payments can cut down on exception processing, promote better visibility into payment information, and enable greater security. Checks, wire transfers, and ACH may become a thing of the past as virtual payments become more common in B2B transactions.