Virtual Cards in the UK: Enhancing Security and Control in Business Spending

Virtual cards have emerged as a revolutionary financial tool, offering businesses a modern approach to budgeting, cost control, and security of financial data. In the UK, these digital payment solutions gained significant traction during the COVID-19 pandemic, when their ease of setup and management proved invaluable amid restricted traditional banking and business operations. The best virtual debit cards offer features and advantages for consumers, such as enhanced convenience and security over traditional physical debit cards.

This innovative technology is particularly beneficial for companies with international operations, where conventional methods like physical corporate cards, bank transfers, and out-of-pocket expenses often fall short. As more providers enter the market, it’s clear that virtual cards are meeting the dynamic needs of modern enterprises.

This article explores the impact of virtual cards on business spending in the UK, with a focus on their role in enhancing budgetary control and improving security. We’ll examine how the encryption of virtual card details, unlinked to personal information, provides an extra layer of protection for financial transactions. The growing importance of this technology is evident, with Mordor Intelligence projecting a Compound Annual Growth Rate of 8% for virtual cards in the UK through 2029.

A virtual card is a digital representation of a debit or credit card that can be stored on a mobile device. Just like a physical card, it comes with a unique card number, verification number, and expiry date. However, unlike a physical card, a virtual card exists only in digital form, making it a convenient and secure option for online transactions.

Virtual cards can be obtained when signing up with digital banks or linked to prepaid accounts. They offer the same functionality as traditional cards but with added security features. For instance, a digital card is essentially a copy of a physical bank card, allowing you to use it for online purchases without exposing your actual card details. On the other hand, disposable virtual cards are designed for single-use, providing an extra layer of protection for one-time transactions.

There are several types of virtual cards available, each catering to different needs and preferences:

Virtual Debit Cards: These cards are linked directly to a bank account and can be used for both online and in-store transactions. They offer the convenience of a regular physical debit card but with enhanced security features.

Virtual Credit Cards: These cards come with a credit line and can be used similarly to traditional credit cards. They are ideal for businesses that need to manage expenses without dipping into their bank accounts immediately.

Disposable Virtual Cards: These single-use cards are perfect for one-off purchases. Once the transaction is complete, the card details become invalid, significantly reducing the risk of fraud.

Virtual Prepaid Cards: These cards are preloaded with a specific amount of money and can be used for online and in-store transactions. They are a great option for budgeting and controlling spending.

This is how the process works step by step:

The card is issued through a bank or financial provider via their website or app, and you will receive the card's unique details - number, expiry date, and CVV code. At this stage, some virtual card providers allow you to set custom rules.

In order to make a transaction online, you would enter the details of the virtual card into the payment gateway just as you would with any other card. Your company funds and information are secure, and all information is encrypted. A financial institution must then verify the transaction to determine if funds are available as well as whether its parameters fall within the card's controls and limits. If everything goes well, the transaction will be approved, and information will be sent to the merchant without revealing any sensitive information.

The payment will be deducted from your account and appear on your statement once it has been processed. Some providers offer disposable virtual cards for one-time use, enhancing security for single transactions.

Virtual cards are being used by businesses around the world to facilitate B2B buying, reduce transaction costs, and increase efficiency. Even if your business is located in the UK, you shouldn’t miss out on the opportunity to improve your financial operations.

With virtual cards, you can monitor and control spending in real-time while eliminating the need for repetitive approval processes for every purchase. All this ultimately translates to better and more efficient control of business spending.

Setting Precise Spending Limits: With virtual cards, businesses can impose precise spending limits on different categories, projects, or teams. A company can allocate a specific budget for marketing expenses and load it to the card to ensure that spending does not exceed the budget. With virtual credit cards, they can set spending limits to keep teams on budget.

Remote top-ups: Hand in hand with the above go remote top-ups, allowing finance teams to load additional funds onto virtual cards upon request, which reduces delays associated with traditional bank transfers. As a result, funds are always available when needed, without slowing down operations.

Merchant and Vendor Controls: Unlike traditional cards, virtual credit and debit cards can be tailored to business needs with custom controls that reject transactions from specific merchants or vendors. It ensures alignment with expense policies and protects the allocated budget from unapproved purchases.

Improved expense reconciliation: Mobile apps and desktop dashboards simplify expense management. All expenses are well documented because employees can upload receipts and invoices on the go. The finance department can spend less time chasing invoices at month’s end and streamline reconciliation.

Security is a top concern for businesses today, especially when it comes to financial transactions and online purchases. The advanced security features of virtual cards significantly reduce the risk of fraud and unauthorised use of funds, making them a safer alternative to traditional physical cards.

Tokenisation and Dynamic CVVs: Virtual cards use tokenisation to replace sensitive card data with a token, making it nearly impossible for fraudsters to access the actual card details. Additionally, dynamic CVVs (Card Verification Values), which change regularly, further enhance security by preventing cybercriminals from reusing stolen card information. This is especially useful for businesses that conduct a high number of online transactions, where the fraud risk is higher.

Mitigating Losses through Instant Card Management: Issuing or blocking a stolen or lost physical card can take days or weeks and involves lengthy back-and-forth with financial institutions. This is even before a new card can be issued. Virtual cards, on the other hand, can be frozen or deleted from a dashboard, and a new card can be issued remotely, minimizing disruptions to business operations. Businesses with global expenses and a global workforce will especially benefit from this feature, as it ensures that employees can continue working without interruption.

Overspending Prevention with Single-Use Cards: Vendors of virtual cards also offer the option of creating single-use cards that are ideal for one-off purchases or trials, preventing recurring charges and unauthorised use. This feature is especially useful for businesses that frequently deal with new vendors or need to make purchases in unfamiliar or new markets.

Your UK business may have subsidiaries in other countries, you may be considering cross-border expansion, or you may simply have clients or suppliers in other countries. In all these scenarios, managing cross-border transactions can be challenging due to volatile exchange rates and costs. Virtual cards can provide a solution to some of these challenges by offering multi-currency support, allowing businesses to conduct transactions in various currencies without incurring significant fees.

Currency Flexibility: Virtual cards can be issued in any currency, giving businesses the flexibility to pay vendors in their local currency and avoid unfavorable exchange rates. A virtual prepaid card can be used for international transactions, providing a secure and convenient payment option. This feature is particularly beneficial for one-off projects in new locations or when setting up operations in a new country. However, for ongoing transactions in multiple currencies, you may still need to consider opening accounts in those currencies to avoid long-term exposure to exchange rate fluctuations.

Cost Savings through Cashback: Certain virtual card providers, such as Fyorin, offer cashback incentives on transactions, which can lead to significant cost savings over time. This can be particularly advantageous for businesses with large recurring expenses, such as fuel costs in logistics or transportation, or subscription services like cloud hosting. By earning cashback, you can effectively free up budget for other critical needs and foster growth.

Managing virtual cards is straightforward and can be done through mobile banking apps. These apps provide a range of functionalities that make it easy to control and monitor your virtual cards:

View Card Details and Transaction History: You can easily access your card details, including the card number, expiry date, and CVV, as well as view a history of all transactions made with the card.

Set Spending Limits and Restrictions: To prevent overspending, you can set specific spending limits and restrictions on your virtual cards. This feature is particularly useful for businesses that need to manage budgets across different departments.

Freeze or Cancel Cards: If a card is compromised or no longer needed, you can instantly freeze or cancel it through the app, ensuring that no unauthorized transactions occur.

Request New or Replacement Cards: Should you need a new card or a replacement for an existing one, you can request it directly through the app.

Add Cards to Digital Wallets: Virtual cards can be added to digital wallets like Apple Pay or Google Pay, enabling contactless payments and further enhancing convenience.

UK CFOs are increasingly looking for tools that will improve financial control while also helping them grow the business strategically. Many virtual cards offer features that align with the strategic objectives of modern CFOs, such as cash flow management, cost reduction, visibility, and financial risk mitigation.

Improved Cash Flow Management: Virtual card transactions are settled faster than traditional bank transfers, which improves cash flow management. Faster money movement allows CFOs to make more informed financial decisions and allocate resources more efficiently. A physical debit card may be required for certain transactions, such as cash withdrawals.

Lower Transaction Costs: Virtual cards combine the advantages of physical cards, the functionality of checks, and the efficiency of bank transfers like SEPA, ACH, and SWIFT, resulting in lower transaction costs. Savings on transaction fees can accumulate over time and have a positive impact on the bottom line for businesses with frequent or high-volume transactions.

Fraud prevention and risk management: Virtual cards provide advanced security features and greater control over transactions, which are vital for managing financial risks. Cards can be tailored in accordance with a company’s budgets and expense policies, giving CFOs a powerful tool to protect financial assets.

Visibility: With the centralised dashboard providing real-time insights into spending across departments and teams, CFOs can make prompt adjustments to budgets and take proactive measures against potential overspending. This level of visibility is crucial for businesses that want to remain competitive and expand internationally.

Virtual cards may come with spending limits and fees, which can vary depending on the provider and type of card. It’s essential to understand these limits and fees to manage your finances effectively. Some common fees associated with virtual cards include:

Transaction Fees: These are fees charged for each transaction made with the virtual card. They can vary based on the type of transaction and the provider.

Monthly Fees: Some providers charge a monthly fee for maintaining the virtual card account. This fee can cover various services and features offered by the provider.

ATM Fees: If you use your virtual card for cash withdrawals at an ATM, you may incur ATM fees. These fees can add up, so it’s important to be aware of them.

Foreign Transaction Fees: When making transactions in a foreign currency, you might be charged foreign transaction fees. These fees can impact the overall cost of international purchases.

To avoid unexpected charges, always check the terms and conditions of your virtual card provider. Understanding the spending limits and fees associated with your card will help you make informed financial decisions and optimize your business spending.

Fyorin empowers international businesses with multi-currency virtual cards that provide efficient expense management, budget control, and cost reduction across borders.

Boost your revenue: Enhance your financial performance by earning cashback on all purchases made with Fyorin cards.

Control budget with ease: Our online platform allows you to effortlessly issue cards, set up automatic top-ups, set up spending limits, and define rules that align with your spending policy.

Cost-efficient global transaction: Benefit from competitive foreign exchange rates and zero-fee card transactions.

Simplify international team expenses: Eliminate reimbursements by issuing single or multi-use cards to individuals or teams.

Automate your reconciliation: Seamlessly integrate with your existing accounting software for hands-off reconciliation and centralised record-keeping.

With our virtual cards, our customers typically save approximately €12,000 annually, with additional earnings from the cashback. Are you ready to optimise your global budget management? Reach out to [email protected] to request your virtual card, or schedule a free demo.

Can I get a virtual credit card in the UK?

Yes, you can get both virtual credit and a virtual debit card in the UK. There are many banks and fintech companies offering virtual cards to business. The availability may depend on your credit score and the specific provider's requirements.

What's the difference between a virtual credit and debit card?

The main difference between a virtual debit and credit card in the source of funds. A virtual credit card borrows money from a pre-approved credit line, which you repay later. On the other hand, a virtual debit card takes funds directly from your bank account it's connected to.

How does a virtual card work?

A virtual card works just as a physical card but exists only in digital form. It has a unique card number, expiry date, and CVV. When making an online purchase, you enter these details as you would with a physical card and the funds are drawn from the linked account or credit line, depending on whether it's a debit or a credit card.