Virtual credit cards are a safe and secure way of making online payments for personal or business use. When using a virtual card, you will not worry about exposing your card information online since your bank information is masked. Therefore, using virtual credit cards for business ensures that business owners can protect their businesses from fraud.
Many credit card issuers offer virtual credit cards for free to all types of businesses.
It is possible to start a virtual credit card for business use as long as you meet the set requirements. Always consult your credit card issuer to know how many virtual credit cards you can access. Also, if you have a corporate card for your business, you can access virtual credit cards for online transactions.
Before creating virtual corporate credit cards for business, you must qualify for a corporate credit card.
Key Takeaways
· The business owner takes five steps to start a virtual credit card business for expense management
· There are requirements that business owners need to meet before starting a virtual credit card business
· Business owners and employers can maximize the advantages present of virtual credit cards for business
What is a Virtual Card Business?
Business owners can access business credit cards specially designed by the credit card issuer for business use. Therefore, the business owner can apply for a business card if they show proof of business ownership. Business credit cards are readily available for all businesses, including small businesses and startups.
Thus, every business owner can have complete control of the business’s finances without mixing their personal assets.
Virtual credit cards for business offer employers and employees a safe alternative for online payment since they prevent fraud. Virtual credit cards are unique card numbers the credit card issuer generates when you have a checking account. During a transaction, you will use the virtual card number and other virtual card details, including the expiry date.
Therefore, you will not enter any information relating to your business’s checking account.
Virtual credit cards will have the same rewards as primary business credit cards. Any charges, including APR and other fees, will apply when using the physical cards or a virtual card. For example, if the main card receives cash rebates and discounts on items after purchase, virtual cards will receive the same.
Due to their digital nature, employees cannot use virtual cards to make any in store transactions or purchases.
Virtual credit cards have short expiration dates, meaning employees can only use them for a short period. However, employers can track all online transactions when employees use virtual credit cards. Also, employers can set spending limits to virtual cards assigned to different employees, even those working in remote teams.
Thus, the employer has full control over the business funds since the employees will account for all transactions.
Steps to Start a Virtual Credit Card Business Immediately
Applying for a virtual credit card business is only possible if a business owner qualifies for a business credit card. Since business credit cards are available to all types of businesses, business owners will show proof of business during application. The credit card issuer must also know the business’s credit score and history.
Sometimes, the credit card issuer will also check the business owner’s credit score, especially when applying for high-value credit cards.
Other requirements include the business’s financial audit, the business’s email address, and the business’s age. Ensure you meet all requirements before applying to avoid a hard inquiry on your credit history, which hurts the business’ credit score. Once you meet all the requirements for a business credit card, you can proceed with the application process.
If the application process is successful, you can apply for virtual credit cards even before the physical card arrives.
If you are applying for a corporate credit card, the application process and requirements may differ from other cards. Corporate credit cards are business credit cards only available to large businesses and corporations. Business owners must prove that they qualify for corporate credit cards through their financial audits.
Thus, only some businesses can apply for and receive a corporate credit card, including a virtual corporate card.
There are a few things you can consider before applying for a virtual credit card business which includes the following:
Eligibility
First, the business owner should meet the right requirements set by the credit card issuer since different issuers have different policies. Additionally, each business credit card, even from the same card issuer, has different requirements for the business owner to meet. However, most credit card issuers will check the proof of business ownership and the business’ credit score and history before application.
Then, other requirements, such as the business owner’s credit score, will be considered during the card application.
Requirements such as financial audits and the business’ credit scores will determine the business’ credit line and interest charges. Since credit cards act as loans, the credit card issuer will gauge how well the business pays back the credit. The business usually carries liability for all credit in most instances since funds from the business pay back credit.
Therefore, you may find some business credit cards cannot be available for startups since they are building credit. However, most business credit cards can increase the business’ credit line as the cash flow increases.
Larger businesses and corporations can access corporate credit cards, which offer complete control over the company spend on funds. Corporate cards have more advanced tools, including accounting software that offers better expense management of business expenses. Corporate cards also have better rewards that can be reinvested into the business.
Business owners can also have advantages for virtual corporate cards, including setting a spending limit on the virtual cards to minimize fraud risk.
Select the best offer
There are various business and corporate credit cards in the market, readily available to different businesses. Thus, the business owner should pick the best credit card that suits the business’s needs. For example, a business that makes many online transactions should pick a credit card that offers the best virtual credit cards.
Also, a business owner should select a credit card that offers rewards programs that benefit the company.
Some credit cards offer welcome bonuses, cash rebates, or discounts on deals that business owners make to different vendors. Therefore, business owners should read through the fine print to determine what rewards they qualify for and how they can access them. Additionally, business owners should choose a credit card that offers the best interest charges and a minimal annual fee on the credit card.
Thus, the business will be able to pay lesser fees, including a monthly fee, and have no credit balance, which may affect its overall credit score.
When selecting virtual credit cards for business, the business owner should consult with the credit card issuer before application. Some credit cards offer access to virtual cards, while some do not; thus, it is important to check before applying. Virtual credit cards for business allow employers to have greater control over funds by allowing employers to set spending controls.
Also, the employer has real time visibility of all transactions in their accounting system, as seen in virtual corporate credit cards. Therefore, employers should analyze all credit cards, including virtual cards, before proceeding with the application process.
Credit card application
After checking whether you meet all credit card requirements, the business owner can continue with the application process. Credit card applications can be made online or in person at a bank branch. However, credit card applications for high-value business credit cards or corporate cards usually require an in-person application.
The credit card issuer will require more time and workforce to review all business details the business owner provides.
To apply for a credit card business, the business owner should submit important details such as the business’s annual revenue. The business owner should also present the legal business name and the number of employees in the business. The credit card issuer will be able to gauge the business’s financial status and how well they can manage credit.
All the information is necessary during credit card application to know how well a business qualifies for a certain credit card.
Usually, the application process may take a few minutes to complete, whether done online or in person. However, the process may take a few hours or days if the credit card issuer requires reviewing extra information. For example, the credit card issuer may look into the business owner’s credit score in case of joint liability.
Joint liability means that the business owner and the company are responsible for paying any credit balance in the business.
It is important to note that companies can take a pre-qualification process to determine whether they qualify for a certain credit card. The business owner will present all necessary documents and requirements to the credit card issuer. Then, the issuer will pull a soft inquiry on the company before the credit card application without damaging the credit score.
If the company qualifies, it can go ahead with a credit card application. When an application is denied, it causes a hard inquiry into the credit score, significantly lowering the business’s credit score.
Wait for approval
After the successful application, the business owner will have to wait for approval before using the business credit card. Additionally, employers can request a virtual credit card business if the application process is successful. Most credit card issuers will offer an instant reply to the business owner, alerting them that their application is successful.
Then you will also be alerted when your physical credit card arrives in the mail, usually after seven business days.
You can use a few tips to increase the chance of approval and reduce the time taken to receive approval. First, ensure that you meet all necessary requirements before applying, including a good credit score. Second, ensure you have no outstanding credit balance on all existing checking accounts before applying.
Finally, include all your yearly income, including your taxes, during your application to increase your chances of qualification.
However, some applications may be denied by the credit card issuer, and they will indicate the reason for denial. Usually, the main reason for denial is a bad credit score or a negative credit history. Sometimes, the business owner’s credit score may directly affect whether the company is approved for a business credit card.
The credit card issuer will discuss with the employer the reasons why the application was denied and what to do about it.
Activate virtual credit card
Once the credit card application is successful, you can request your credit card issuer for a virtual credit card. Many credit card issuers offer free and unlimited credit card numbers for making online payments. Additionally, the employer can assign a single virtual card to each employee and set limits on the card to avoid overspending.
Virtual corporate credit cards allow employers to set different limits on the virtual card, depending on the employee’s responsibilities. The employer can also restrict an employee from making certain purchases that another employee is allowed to make. For example, one employee can make online purchases for office supplies, and the other can book flights online.
Therefore, the employer has greater control over expense management, including how employees spend money in the company.
The employer can create as many virtual credit card numbers as possible since every online transaction requires new card numbers. However, in the case of recurring payments to a certain vendor, the employer can create merchant-specific card numbers. While making card transactions with the vendors, the employee will use the same virtual card numbers.
If the virtual card is compromised or at risk of fraud, the employer can cancel it and replace it with another one.
Usually, statements produced after online transactions using a virtual card do not reflect on the main card’s account. However, employers can track all transactions made by the employee while using a physical or virtual card. Usually, corporate cards have better accounting software tools to generate fast expense policies for better expense management.
Therefore, the employer can make custom controls on virtual credit cards to monitor the company spend online and physically.
Maximize advantages
All virtual credit cards for business have great advantages for the employer, especially while managing funds in the company. One main advantage is employers can set spending limits to avoid overspending money on purchases. Thus, the employer has better control over the money in the company even when employees make online transactions.
7Additionally, the employer can assign virtual credit cards to different employees to make purchases depending on the employee’s responsibility.
Another advantage is that the employer can create unique card numbers for a particular vendor, especially when making recurring payments. Therefore, the employer can create a merchant-specific card number to minimize fraud risks associated while making vendor payments. The employer can cancel the virtual card anytime if it is compromised and replace it with a new card number.
Thus, the employer will still have full control over all of the finances within the company.
Conclusion
Starting a virtual credit card business for all types of companies is an easy task to achieve for business owners. Virtual credit cards offer protection from credit card fraud while making an online transaction. Thus, many employers are now advocating for the use of virtual cards for their employees to pay for business-related items online.
However, a virtual card business is only limited to the digital space, and employees cannot make in store purchases using the card.
There are several requirements that the business owner must meet before starting a virtual credit card business. The business owner must show that they own the business, the credit history of the business, and other details. However, some businesses cannot qualify for certain types of virtual credit cards, while others do.
Larger companies and corporations are the only ones qualified to access virtual corporate credit cards for their companies. All virtual credit cards have great advantages which the business owner should maximize.
FAQs
What are the advantages and disadvantages of a virtual credit card business?
Virtual credit cards for business mainly offer protection from fraud since they do not expose any checking account transaction details online. Additionally, the employer can use tools such as accounting software to track all online transactions made by virtual cards. The employer has better control of the business funds since they can set limits on each virtual credit card.
However, a virtual credit card business is only limited to online use due to its digital format.
Who can start a virtual credit card business?
Any business owner who meets all requirements set by the credit card issuer can start a virtual credit card business. However, some virtual cards are only accessible to certain businesses; for example, large companies can access virtual corporate cards. Therefore, the business should meet the set conditions and policies before applying for a virtual card that fits its needs.
Thus, consult your credit card provider to know which virtual credit card business you can access.
What to do if your virtual credit card business application is denied?
Usually, the application is denied due to negative credit history or poor credit scores that various factors may cause. Also, if the business owner’s credit score is low, the virtual credit card business application will be denied. However, the credit card issuer will indicate why the application process was unsuccessful.
Find ways to improve your chances of qualifying with your credit card issuer for the next application process.
