The Complete Guide to Virtual Credit Cards for Businesses

Managing employee expenses with traditional bank cards is inefficient.

With no control over spending, employees can easily exceed limits, leading to overspending. Sharing cards among multiple team members makes it hard to track who’s spending what, causing confusion and missed accountability. Additionally, reconciling these expenses takes longer, with finance teams struggling to match receipts and transactions, delaying the book-closing process.

With so many moving parts, keeping control feels almost impossible. This is where virtual credit cards come in. 

Virtual credit cards allow businesses to set specific spending limits for each employee or transaction by assigning unique card numbers for each purchase or department, eliminating overspending and misuse. No more card sharing and no more delays in reconciling expenses. 

But could they offer the control, transparency, and efficiency your business needs for managing employee expenses? 

Let’s look at it in this blog post. 

What is a Virtual Credit Card?

A virtual credit card is a digital card linked to your primary credit account with a unique card number for online or one-time use. It enhances security by masking actual card details, reduces fraud risks, and allows precise spending controls, making it ideal for managing employee expenses.

How Does a Virtual Credit Card Work?

A virtual card generates a unique, temporary card number linked to your primary credit account. Unlike traditional physical cards, virtual credit cards exist only in digital form, making them ideal for online purchases or one-time transactions. 

Here's how it works:

1. Issuance: You request a virtual credit card through your bank or a third-party provider. The provider generates a unique card number, expiry date, and CVV for each transaction or employee.
2. Payment: When purchasing, you use the virtual card details instead of your primary card. These details are only valid for the specific transaction or period defined.
3. Control: You can set spending limits, expiration dates, and usage restrictions for each virtual card. This prevents unauthorized use or overspending.
4. Security: Since the virtual card number is temporary and distinct from your actual card, it adds an extra layer of security by preventing fraud and keeping your primary account details safe.
5. Tracking: Every purchase made with the virtual card is easy to track and reconcile, giving you clear insights into where the money is going and simplifying the expense management process.

Use Cases for Virtual Credit Cards

Virtual credit cards offer a flexible and secure solution for managing various expenses. Here are some key use cases where virtual credit cards can add significant value:

• Vendor payments: Virtual credit cards allow businesses to make secure, one-time payments to vendors without exposing the company’s primary card details, ensuring safer transactions and greater control over vendor-related expenses.
• Contractor expenses: Virtual credit cards provide an efficient way for businesses working with contractors to manage payments while keeping spending within set limits. Contractors can access the funds they need without risking misuse.
• Subscriptions: Managing multiple subscriptions can get messy with traditional cards. Virtual credit cards make it easy to set up individual cards for each subscription with the ability to cancel or modify them as needed.
• Travel: Virtual credit cards are ideal for business travel expenses. They allow you to assign temporary cards for flights, accommodations, and daily allowances, which ensures better tracking and control of travel-related costs.
• Employee expenses: Instead of relying on cash or reimbursements, virtual credit cards enable employees to make authorized purchases with pre-set spending limits, ensuring expenses are tracked in real time.
• Employee benefits: Virtual cards can also be used to manage employee benefits, like gift cards or wellness programs, ensuring funds are used for their intended purposes.
• Departments or project teams: Each department or project team can be assigned a virtual credit card with tailored spending limits. This ensures efficient management of department-specific budgets and reduces the risk of overspending.
• Marketing spend: Virtual credit cards offer a simple solution for tracking marketing expenses. They provide clear insights into ad spending and help you stay within budget without compromising control.
• Small supplies or one-time orders: For small or infrequent purchases, virtual credit cards simplify the buying process by offering temporary card numbers for one-time orders, reducing the hassle of using corporate cards.

Virtual Credit Card: Pros and Cons

Here’s a table outlining virtual credit cards' pros and cons.

So, while virtual credit cards provide security, spending control, and easy tracking, they have limitations on usage and setup complexity. Overall, they are a powerful tool for preventing corporate card misuse but can increase the burden on teams as the business scales.

Are Virtual Credit Cards Right for You?

If your business requires secure, controlled spending for online transactions or quick vendor payments, then virtual credit cards are a great addition. They provide enhanced fraud protection, allow you to set spending limits, and make it easier to track expenses for specific users or transactions.

However, they are unsuitable if your business requires multiple cards simultaneously, needs recurring payments, or relies heavily on physical purchases. Effective virtual credit card implementation also demands clear corporate card policies, well-structured approval workflows, and tools to track and reconcile expenses efficiently.

So, if your business lacks these systems, virtual credit cards create more complexity and become a burden for your team. In such cases, expense management software is a better fit. 

Expense management software not only provides unlimited budget-controlled cards, both physical and virtual, but also integrates these cards with configurable automated approvals, real-time tracking, and expense policies, eliminating the hassle of manual oversight. By centralizing all expense data in one place, it ensures easier reporting, faster reconciliation, and better overall visibility into spending.

So, while virtual credit cards are the right choice for businesses with simpler approval workflows and specific online spending needs, an expense management solution offers broader functionality and better aligns with the needs of growing businesses.

Managing Employee Expenses With Confidence

Implementing a new card system improves spending control but does not fix existing gaps in your financial processes. Without clear policies and systems, challenges like unauthorized spending, missed approvals, and time-consuming reconciliation persist.

Pluto is designed with this in mind, focusing on creating a structured approach to expense management. It enables you to set spending limits, establish approval workflows, and seamlessly integrate with your accounting software. This ensures every transaction is tracked, approved, and recorded properly.

So, if you’re looking for a solution to manage employee expenses confidently, book a demo to explore how Pluto can support your business.