Virtual Cards Brought Flexibility and Security to B2B Payments in 2024

Throughout 2024, the adoption of virtual cards signaled a shift in how businesses approach B2B payments.

Historically relegated to the sidelines due to limited supplier acceptance, virtual cards are now increasingly moving to the forefront of payment innovation, in large part by addressing the critical inefficiencies inherent in traditional payment methods like checks and ACH transfers, including lengthy processing times, limited security features and cumbersome reconciliation processes.

By leveraging speed, security, cost savings and automation, virtual card solutions can help provide a key solution for modern businesses looking to optimize their financial operations and adapt to a digital-first economy.

While the pandemic initially accelerated the adoption of digital payment tools, the evolution of virtual cards has continued across sectors, driven by innovations in technology, a growing focus on efficiency and the ever-present need for robust fraud prevention.

As we look to 2025 and the growing demand for seamless, real-time transactions, it is likely that the adoption of virtual cards could play a pivotal role in supporting the ongoing transformation of not just the B2B payment landscape, but the finance function itself.

Read more: How Buyers and Suppliers Rewrote the Rules of B2B Payments in 2024

How Virtual Cards Address Inefficiencies

Virtual cards offer unparalleled flexibility compared to traditional B2B payment mechanisms, making them a perfect fit for today’s dynamic business environments. Unlike physical corporate cards, virtual cards are generated digitally and can be issued instantly for specific transactions.

This adaptability can be invaluable for organizations managing fluctuating payment volumes, such as seasonal purchases or project-based expenses. Companies can set transaction-specific controls — including spending limits, merchant restrictions and expiration dates — ensuring each virtual card is tailored to its intended purpose.

In the PYMNTS Intelligence report “CFOs Want Virtual Cards in Their Toolkits,” 56% of CFOs say virtual cards are key for managing financial flexibility.

At the same time, virtual cards help to streamline procurement processes, particularly in sectors that demand rapid payment execution. For instance, marketing agencies can allocate unique virtual cards to ad campaigns, while logistics firms can issue cards for on-the-spot fuel purchases or unexpected repairs. By segmenting payments in this way, businesses gain granular visibility into expenses, enhancing their ability to manage budgets and control costs.

“We’ve seen tremendous growth in virtual cards over recent years,” Widad Chaoui, vice president and general manager, corporate program product management at American Express, told PYMNTS, noting that fundamental to the promise of virtual cards is their ability to deliver enhanced fraud protection, automation and flexibility compared to traditional methods, such as checks — three qualities that resonate strongly.

Read more: Flexible Working Capital Solutions Top Holiday Wish List for B2B Firms

Supplier Acceptance: Overcoming the Biggest Hurdle

Still, for years, limited supplier acceptance hindered the widespread adoption of virtual cards. To get a sense of the untapped potential, consider the fact that earlier this year, Paul Christensen, CEO of B2B payments accelerator Previse, told Karen Webster that though 80% of buyers favor virtual cards, their use accounts for just 2% of their accounts payable transactions.

Educational initiatives are playing a pivotal role in breaking down resistance among suppliers. Payment providers and industry associations are increasingly investing in training programs to demonstrate how virtual cards can simplify reconciliation, reduce administrative overhead, and improve cash flow; while integration with existing enterprise resource planning (ERP) systems and accounts payable (AP) platforms is helping to eliminate much of the friction that previously discouraged suppliers from accepting virtual cards.

Unlike traditional payment methods, virtual cards can integrate with modern AP automation tools, enabling businesses to digitize their payment processes end to end. This automation minimizes manual intervention, reducing errors and freeing up finance teams to focus on strategic initiatives.

For businesses managing a high volume of transactions, virtual cards eliminate the need for time-consuming reconciliation processes. Each virtual card is tied to a specific invoice or transaction, creating a direct, auditable link between payment and purpose. This transparency significantly reduces the risk of disputes and simplifies financial reporting.

Strategic virtual card usage is becoming an integral tool for improving working capital efficiency, enabling companies to better manage cash flow, extend payment cycles and enhance overall financial agility.

“They’re the superpower of working capital,” Darren Parslow, global head of Visa Commercial Solutions, said of virtual cards to PYMNTS, noting that this shift reflects the broader trend in corporate finance of leveraging virtual cards to optimize cash flow, extend days payable outstanding (DPO) and streamline working capital.

Looking ahead to 2025, the trajectory is clear. Approximately 80% of CFOs and treasurers plan to increase their use of external working capital, with virtual card usage projected to double. Retail and marketplace companies are expected to lead this charge, though the trend spans across sectors.

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