Virtual cards could unlock untapped potential in the commercial cards sector thanks to the extra security, control, and efficiency they provide, according to RBR.

Virtual commercial cards are digital card numbers generated centrally or instantly issued, which are distinct from tokenised versions of plastic cards in mobile wallets. They are offered primarily by specialists, but increasingly also by traditional bank issuers.

A study from the research and consulting company finds that the rising proportion of European commercial card spending is virtual.

€42.7 billion was spent on European virtual commercial cards in 2019, accounting for 12 per cent of total commercial card spending, according to the report.

Virtual card expenditure in the region increased at an average of 32 per cent per year between 2016 and 2019.

The research also found that virtual cards are widely used for booking flights and other procurement.

The RBR study reveals that cards associated with travel represented 83 per cent of European virtual commercial card spending in 2019. These include Lodge cards, which are held at travel management companies to pay for their client companies’ flights and other travel expenses.

Virtual cards are also used by online travel agencies, such as Expedia, to pay their supply chain.

But the travel restrictions imposed as a result of Covid-19 represent a short-term inhibitor of virtual cards because many are used for travel-related expenses.

The company said that virtual purchasing cards, used to facilitate procurement, are also gaining traction. These cards are used, for example, for office supplies in Poland, managing subscriptions, such as for software packages, in Spain, and social media advertising in Norway.

Purchasing cards accounted for 17 per cent of virtual card expenditure Europe in 2019.

According to RBR security and control are two major advantages of virtual cards.

Unlike physical cards, virtual cards cannot be lost. In addition, virtual card numbers are often generated to settle a specific invoice and expire after use, thereby preventing fraudulent usage.

For multi-use virtual cards, company administrators may define the maximum spending amount and the merchant sectors where usage is permitted.

“Virtual cards will play a major role in shaping the future of the commercial cards sector as the pandemic has accelerated the shift to online payments,” said Chris Herbert, who led the research for RBR. “Going forward, the expansion of NFC acceptance will also open up more opportunities in face-to-face payments, with virtual-only cards embedded in mobile wallets increasingly substituting plastic cards”.

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