Article

The Driving Forces Behind the Explosive Growth In Virtual Cards

digital wallet icon and dollar icon, online wallet business concept. Man holding smartphone and using computer laptop with online transaction application, Concept of e-commerce and internet investment

It’s been said that the Covid-19 lockdowns compressed five years of digital transformation into one. This happened by need, not choice. Just about every manual process in every industry needed a digital update. 

In finance departments, the need proved particularly acute. Sixty-two percent of finance professionals reported that the shift to remote work led to delays in invoice processing and vendor payments.1

The rush to digitization was not without hiccups. The Association for Financial Professionals reports that 30% of companies reported an increase in Accounts Payable (AP) fraud attacks in 2020, while overall, 74% companies experienced at one or more attempts.2

That was then. Today, organizations are less rushed, more deliberate in their implementation of digital AP solutions. And as the dust settles, virtual cards emerge as a premier choice in numerous finance departments.

Virtual cards have the unique ability to streamline accounts payable operations and pay vendors more quickly, all while combatting fraud. They also have significant cost advantages over other payment vehicles.

The Meteoric Rise of Virtual Cards in B2B Payments

By every metric under the sun, businesses are adopting virtual card payments at an astonishing pace. Juniper Research expects the global market to reach $9.1 trillion in 2027, a 280% increase from 2022. 3 Transaction volumes will grow 340% to exceed 121 billion.4 And while B2B payments account for only 1% of the transaction volume, they also account for 71% of the total transaction value.5

Businesses have become more willing to spend significant sums in remote, digital channels. McKinsey and Company reports that 70% are willing to spend $50,000 or more and 35% would are prepared to spend $500,000.6

In fact, businesses aren’t only willing to make significant purchases online. They insist on it. PYMNTS.com reports, “64% of B2B buyers expect the ability to pay for their purchases online, and 56% demand several payment options.”7

Virtual cards improve operational efficiencies for payers and payees.

A Simple, Flexible, No-cost Path to Digital AP Efficiency

Despite the drive to digitize operations, many organizations remain mired in legacy systems. 

When asked to name their top Accounts Payable challenges, 29% of companies cited too much paper or manual data entry. Another 15% cited processing delays caused by data errors and discrepancies. 8

Stillm, the drive to automate AP can hit organizational pushback and snags. And that’s where virtual cards can give you an “easy win.”

There’s practically no learning curve. If you know how to pay a vendor with a bank-to-bank automated clearing house (ACH) payment, you can generate a virtual card to pay that vendor.

Virtual cards are like credit or debit cards, except the card numbers are randomly generated and do not exist on any physical card, magnetic strip, or chip. They’re created with hyper-specific spending rules to control which vendor can charge against the card, when, and how much. They’re almost impossible to misuse.

Moreover, B2B vendors have designed their virtual card systems to integrate with customers’ accounting and ERP software. You can hard wire GL codes, purchase order numbers, and other accounting data to the card. The systems also capture invoice and receipt images. 

There are no papers to get lost, no time-consuming manual data entry. Reconciliation becomes a simple review-and-click operation. All the details enter your accounting system automatically. One PEX customer reported the automated process replaced an administrator’s five hours of data entry with 20 minutes of click and review. Do the math and you find a 97% increase in efficiency.

It’s also worth noting that virtual card usage doesn’t make you a major contributor to the soon-to-be $8.3 billion 9“Accounts Payable” automation market. Virtual card vendors provide their software and integrations at minimal or no cost.

Secured Against Payment Fraud by Design

The Association for Financial Professionals reports10 that 65% of organizations experienced at least one payment fraud attack in 2022. Among the victims of successful attacks, 44% recovered none of the funds that were stolen and only 39% were able to recover more than half.

While 63% of respondents experienced fraud via checks, other payment vehicles — including ACH, commercial card, and virtual cards — saw an increase in attacks. It’s worth noting, however, that fraud attempts against virtual cards increased 6% even though virtual card usage jumped more than 20%.

Though no payment method is immune from attack, odds of success in an attack on virtual cards are very low.

Each card can only be used by one vendor at a pre-determined time for limited amount. If a thief managed to get an account number, any attempt to use the card will most likely bounce. 

At that point, the payer gets an alert, and they can then cancel the card and, if need be, replace it. It only takes a minute.

A Growing Acceptance Among Vendors

Many vendors have found that the benefits of virtual card acceptance outweigh the cost of processing them.

Virtual card payment systems work well with their internal accounts receivable (AR) software. This technology is a key factor in reducing days sales outstanding (DSO) cycles. 

PYMNTS.com11 reported during the pandemic that 62% of firms saw AR automation deliver DSO improvement.The average firm reduced DSO from 47 days to 40. A near 20% improvement in cash flow.

Fact is, when you pay with a virtual card, vendors receive a notification instantaneously.  Even if it takes a day or two for the cash to enter their account, you’ve paid the bill. 

Checks can take days to arrive, deposit, and clear. Not to mention the risk that they can be lost or stolen. ACH payments can sometimes take up to three days to clear, and the notifications may not be so quick and clear.

Vendors also find that accepting virtual cards attracts customers. McKinsey reported in 2021 that B2B executives grew to an average of 10 channels to interact with suppliers. That was also the year that ecommerce passed in-person selling as the primary sales channel for B2B buyers. 12Virtual cards also bring in big buyers. As we said earlier, 35% of executives would spend $500,000 on in ecommerce and 70% would spend $50,000.13

Lowest Cost Per Payment

It can cost $2 – $4 to cut a check. If you pay a vendor by ACH, the cost drops to 26¢ – 50¢, mostly labor.14

Virtual cards, on the other hand, pay you. The typical rewards program pays 1% cashback on purchases with virtual cards.

And, as we explained earlier,  it takes no more labor to pay by virtual card than it does by ACH.

Up to $75,000 in Additional Working Capital

PEX Virtual Vendor Cards can be tied to our PEX Credit Expense. You get all the efficiency, security and flexibility of virtual cards plus $75,000 in credit with no interest or fees. Your business can qualify for PEX credit Expense with no personal credit checks or guarantees. PEX also lets you port many of the benefits of virtual vendor cards to physical prepaid debit and disburse cards. Click here for a free demo.


  1. “Deep Dive: How AP Automation Can Lower Businesses’ Fraud & Processing Labor Costs.” (2022). PYMNTS.com ↩︎
  2.  2021 Association for Financial Professionals® Payments Fraud and Control Survey Report. (2021). AFP ↩︎
  3.  “Virtual Cards: Sector Analysis, Competitor Leaderboard & Market Forecassts 2022-2027,” (2022) Juniper Research ↩︎
  4. “Virtual Card Transaction Volumes to Surpass 121 Billion Globally by 2027,” (2022), Juniper Research ↩︎
  5. Joy Dumasia, “Juniper Research: Virtual card transactions to reach $6.8 trillion in 2026,” IBS Intelligence, June 28, 2021 ↩︎
  6.  Mark Brohan, “B2B buyers and sellers put digital commerce on a faster track,” Digital Commerce 360, Dec 16, 2021 ↩︎
  7.  B2B Digital Payments Tracker (2022), PYMNTS.com ↩︎
  8. “Accounts Payable Automation Trends 2022: The Speed of Change,” (2022) Institute of Financial Operations Leadership ↩︎
  9. “Accounts Payable Automation Market,” (2022), Allied Market Research ↩︎
  10. “2023 AFP Payments Fraud and Control Survey,” (2023), Association for Financial Professionals ↩︎
  11. “62% of Firms Realize DSO Improvement From AR Automation,” (2021) PYMNTS.com ↩︎
  12. Mark Brohan, “B2B buyers and sellers put digital commerce on a faster track,” Digital Commerce 360, Dec 16, 2021 ↩︎
  13. Mark Brohan, “B2B buyers and sellers put digital commerce on a faster track,” Digital Commerce 360, Dec 16, 2021 ↩︎
  14. “73% of Organizations Transition from Checks to Digital Payments,” (2023),  Association for Financial Professionals ↩︎
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