How Do Virtual Cards Impact Accounts Payable?

For most enterprise finance teams, the conversation around payments rarely goes beyond checks, ACH, or wires. But as organizations look for smarter, safer, and more efficient ways to manage outgoing cash flow, virtual cards are quickly gaining attention, especially in accounts payable.

At first glance, virtual cards may sound like just another payment option. But dig deeper, and they reveal a significant opportunity: to reduce fraud risk, earn cash-back rebates, streamline reconciliation, and bring more control to supplier payments.

In this blog, we break down what virtual cards are, how they fit into modern AP workflows, and the strategic benefits they can unlock for finance teams managing high-volume, high-value payments. If you're exploring ways to make AP more agile, secure, and cost-effective, this is a good place to start.

What Are Virtual Cards?

Virtual cards are digital representations of physical credit or debit cards. Unlike traditional corporate cards, virtual cards are designed for limited or single-use transactions, providing greater control and security. Issued by financial institutions or fintech providers, each virtual card consists of a unique 16-digit number, expiration date, and CVV code. 

According to Deloitte, virtual card use in B2B payments is projected to grow at a compound annual growth rate (CAGR) of 21% through 2027, highlighting its rising importance in digital finance strategies (Deloitte, 2024).

What Are Virtual Card Payments?

Virtual card payments refer to transactions executed using digitally generated card numbers. These payments are single-use or limited in scope and expire after use or within a defined time window.

When compared to paper checks or ACH transfers, virtual card payments offer increased transparency, traceability, and a stronger defense against fraud. According to Ardent Partners, organizations that adopt virtual card payments reduce payment processing costs by up to 60% (Ardent Partners, 2022).

Virtual card payments are an integral part of a broader accounts payable automation strategy, streamlining invoice approvals and payment reconciliation.

How Do Virtual Card Payments Work?

Virtual cards are reshaping how finance teams handle supplier payments, making the process faster, safer, and more controlled. While the technology behind them is sophisticated, the workflow is straightforward. Here’s how virtual card payments typically work within an accounts payable process:

1. Invoice approval

The process starts when a supplier submits an invoice. The AP team or automation system reviews it for accuracy, matches it against the PO or receipt (if applicable), and routes it for approval based on internal controls.

2. Virtual card generation

Once approved for payment, a single-use virtual card is generated—either by your issuing bank or through an integrated AP automation platform. Each card is created for the exact invoice amount and linked to that specific transaction. Built-in controls—such as merchant restrictions, expiration dates, and one-time usage—prevent overcharges, fraud, or accidental reuse.

3. Secure delivery to the supplier

The virtual card details (typically a 16-digit card number, expiration date, and CVV code) are securely shared with the supplier. This is often done through encrypted emails, supplier portals, or payment notification systems.

4. Payment authorization and settlement

The supplier processes the virtual card like any standard credit card transaction through their payment terminal or merchant gateway. Funds are authorized immediately and typically settled within 24–48 hours, depending on the card network.

5. Automated reconciliation

After the payment is processed, your AP system retrieves transaction data from the bank or payment provider. The system matches it to the corresponding invoice, auto-updates payment status, and posts the entry to the general ledger, reducing manual work and improving financial accuracy.

Benefits of Virtual Cards in Accounts Payable

Virtual cards offer a wide range of operational, financial, and compliance benefits that make them a valuable tool for enterprise accounts payable teams. Their adoption supports greater efficiency, control, and security across the payment lifecycle.

1. Enhanced spend control

Virtual cards allow finance teams to issue payments with strict parameters, including supplier name, transaction amount, and expiration timeline. These controls prevent misuse by ensuring each card can only be used for the intended purpose and within defined limits. This level of oversight supports corporate policy enforcement, helps avoid maverick spending, and ensures that payment authorizations remain within approved thresholds.

2. Fraud risk mitigation

Unlike traditional payment methods, virtual cards are typically single-use and expire shortly after issuance. These features significantly reduce the risk of unauthorized transactions or fraudulent reuse. Because card credentials are dynamic and tied to specific payment instructions, they provide a more secure alternative to checks or ACH transfers, which rely on static information that is more susceptible to interception or compromise.

3. Rebate and revenue generation

Many issuing banks and fintech providers offer rebate programs tied to virtual card spend. When a company processes supplier payments through virtual cards, it can earn a percentage of the total spend back as a rebate. This creates a financial incentive to route high-volume or recurring payments through virtual card programs, transforming AP from a cost center into a revenue-generating function without additional effort.

4. Faster and more accurate reconciliation

Virtual card transactions integrate with AP automation and ERP systems, enabling immediate visibility into payment data. Because each card is linked to a specific invoice or purchase, the system can automatically match transaction records to corresponding financial documents. This reduces the need for manual reconciliation, eliminates data entry errors, and accelerates the month-end close process, all while improving the accuracy of financial reporting.

5. Improved supplier relationships

Virtual cards help streamline payments by providing suppliers with fast, secure settlement without the need to exchange banking information. Payments are processed through standard credit card networks, which suppliers can access without requiring onboarding delays. This ensures timely payments, reduces disputes over remittance, and supports better working capital for vendors—all of which contribute to stronger long-term supplier relationships.

5 Ways Virtual Cards Are Changing Accounts Payable

With a major shift in how businesses handle payments, virtual cards are at the center of it. As companies strive for faster, safer, and smarter financial operations, virtual cards are reshaping traditional accounts payable practices. From speeding up cash flow to improving audit readiness, these digital tools are proving to be more than just a payment method; they're becoming a strategic AP asset.

Here’s a deeper view into how virtual cards are changing AP:

1. Digitization of payments

Virtual cards help eliminate the inefficiencies of paper checks and manual ACH processing by enabling instant, digital payments. When issued through AP automation platforms, they deliver greater speed, security, and process consistency.

2. Accelerated cash flow cycles

Traditional payment methods like paper checks or ACH transfers can delay fund settlement, hurting both cash flow visibility and supplier satisfaction. Virtual card payments, on the other hand, are processed in under 24 hours, compared to the 5–7 day turnaround for checks. This faster cycle means suppliers get paid quicker, businesses can better manage working capital, and AP teams can confidently close the books on time each month.

3. Granular spend visibility

With metadata tied to every transaction, finance teams gain line-level visibility across payments, enabling more accurate reporting, faster budget reviews, and better policy enforcement. 

4. Reduced onboarding risk

One of the biggest friction points in vendor management is collecting and storing sensitive banking details. Virtual cards eliminate this hurdle. Instead of requiring suppliers to share their bank info, you simply send them a one-time-use card number with a fixed value. This significantly reduces onboarding effort, accelerates time-to-first-payment, and minimizes the risk of data breaches or payment fraud.

5. Simplified audits and compliance

Virtual cards leave a digital trail that’s easy to track and match with corresponding invoices and approvals. Since every transaction is pre-configured and digitally authorized, audit trails become automatic and error-free. This makes it easier to meet regulatory requirements and simplifies AP audits as a task that once took weeks can now be handled in hours.

How To Implement Virtual Cards Into Your AP Workflow

Implementing virtual cards in your accounts payable (AP) process isn’t just about flipping a switch—it’s about making strategic, step-by-step improvements that ensure your payment operations are efficient, secure, and scalable. Here’s how to do it right:

Step 1: Evaluate AP process maturity

Before introducing virtual cards, take a step back and assess where your current AP process stands. Are you still relying on manual invoice approvals, paper checks, or spreadsheets? Are there recurring errors or delays? A mature AP function typically has digital invoice workflows, clearly defined approval hierarchies, and some level of automation already in place.

Key areas to evaluate include:

• Where bottlenecks occur (e.g., delayed approvals or frequent payment errors)
• Which tasks are still manual and prone to human error
• Existing risks around fraud, compliance, or data security

This assessment helps highlight areas where virtual cards and AP automation can add immediate value.

Step 2: Select a virtual card provider

Once the problem areas are identified, choose a provider that integrates smoothly with your existing ERP or AP automation platform. A strong partner should offer real-time reporting, flexible card controls, and competitive rebate terms. 

Step 3: Establish payment policies

To keep usage compliant and consistent, define clear policies on how virtual cards should be used. This includes setting vendor eligibility criteria, spend limits, expiration rules, and approval workflows. Having predefined guardrails helps avoid off-policy spending and gives your finance team peace of mind.

Step 4: Integrate with AP automation tools

Link your virtual card solution with your AP automation platform to ensure that invoice approval, card issuance, and reconciliation are all part of a single digital workflow. This eliminates manual handoffs, reduces human error, and enables real-time tracking. Integration also helps auto-reconcile payments within your ERP system, making the month-end close faster and cleaner.

Step 5: Vendor communication & onboarding

Educate suppliers about the new payment system. Provide clear documentation and a support mechanism to ease adoption. Your virtual card rollout is only as successful as your vendor adoption. Communicate clearly with suppliers about the benefits, faster payments, no need to share bank details, and a simplified payment experience. Offer a quick onboarding guide or a short demo session to make the transition smooth and hassle-free.

Step 6: Monitor key metrics

Once the system is up and running, the job isn’t done. Regularly track performance to make sure your virtual card program is driving results. Key metrics to watch include:

• Payment cycle time – Are payments being processed faster than before?
• Rebate income – How much value are you earning through card rewards?
• Error rates – Are failed or duplicate payments going down?
• Vendor satisfaction – Are suppliers happy with the new method?

These metrics help you fine-tune your approach and build a data-backed case for continued investment in digital payments.

Conclusion

Virtual cards are no longer just a convenient payment option—they’re a strategic upgrade to how accounts payable operates. By combining faster payments, tighter control, and built-in security, they help finance teams move beyond manual inefficiencies and toward intelligent spend management.

As supplier networks grow and payment volumes scale, traditional payment methods often fall short in transparency, speed, or reconciliation. Virtual cards fill that gap, offering not just operational ease but measurable benefits—from early payment discounts to fraud prevention and better cash flow control.

For AP leaders looking to modernize without overhauling core systems, virtual cards offer a low-friction, high-impact way to improve outcomes. Whether you're tackling reconciliation backlogs or tightening policy compliance, they help set the foundation for a more agile and accountable finance function.

The shift to smarter payments has already begun, and virtual cards are quietly leading the way.

FAQs on Virtual Card Payments

1. What are virtual card payments in accounts payable?

Virtual card payments are secure, single-use digital card numbers generated to pay vendor invoices. Each card is tied to a specific amount and supplier, with built-in controls like expiration dates and spend limits. These payments streamline AP workflows, reduce fraud, speed up processing, and simplify reconciliation by integrating with automation tools.

2. How do virtual cards improve payment security in AP?

Virtual cards drastically reduce fraud risk by using dynamic, one-time-use credentials that expire after the transaction. Each card is issued for a specific invoice and vendor, preventing unauthorized use or overcharging. Since no sensitive bank information is exchanged, the risk of interception, misuse, or duplicate payments is significantly minimized in the AP process.

3. How do virtual cards support accounts payable automation?

Virtual cards integrate seamlessly into AP automation systems. Once an invoice is approved, a card is generated automatically, used for payment, and linked back to that invoice. This process enables faster payments, real-time tracking, and automated reconciliation—eliminating manual entry, reducing errors, and ensuring a smoother, more scalable payment operation.

4. Do suppliers need to share bank information to receive virtual card payments?

No, suppliers don’t need to share bank details. Instead, they receive a secure, one-time-use card number via encrypted email or supplier portal, which they can process like any credit card. This eliminates the risk of storing sensitive banking data, shortens onboarding time, and enables faster, frictionless payments that are easy to reconcile and track.

5. What are the financial benefits of using virtual cards in AP?

Virtual cards help companies reduce payment processing costs while also earning rebates on card spend from providers. By shifting check or ACH payments to virtual cards, businesses improve cash flow, accelerate payment cycles, and turn AP into a revenue-generating function. Combined with automation, they increase efficiency and financial visibility.