5 minute read
Will virtual cards replace physical cards as your primary payment option?
Banks and their commercial clients rely on TSYS’ Virtual Payment Precept as a flexible virtual card solution to enable mobile solutions for efficient and reliable in-person transactions
By 2024, chances are you will be one of the 1 billion contactless mobile payment users in the world. You will also likely contribute to the 121 billion virtual card transactions by 2027, a number that represents a growth of 340% over just the previous two years. Virtual cards are not only growing for commercial card usage—they will represent roughly 40% of the U.S. commercial card spend by 2026—they are a preferred method of payment because the technology helps with fraud, convenience and overspending.
For the last several years we’ve seen the signs of this coming, as neobanks and fintechs have proven that businesses are hungry for more mobile payment solutions for virtual spending. The ease and reliability of smartphones and digital mobile payment technology are key drivers of the growth. All new, on-demand digital management and disbursement platforms that focus on using virtual cards, such as pay with Extend, make it easier for businesses to manage spending. With such advances in technology and the increase in spending, it might not be surprising that the charge volume on virtual cards is expected to grow from $1.9 trillion to $6.8 trillion by 2026—with 71% of this volume expected to be B2B spend.
The future of frictionless payments requires a modern solution
Despite the allure of new payment experiences, not all businesses want to risk leaving their trusted bank partner for a startup bank or fintech. As more companies search for digital solutions, 75% of executives believe modernizing payments needs to be a priority. This is where TSYS comes in. With its Virtual Payment Precept (VPP) solution that integrates into mobile applications and digital payment providers, TSYS continues to transition to more modern and resilient infrastructure to support bank partners in the future of payments. VPP supports the in-app provisioning of its virtual cards directly into mobile wallets, such as Apple Pay and Google Pay, for a complete in-person digital payment experience.
In addition, TSYS’ partnership with Extend is an example of how a modern virtual card engine is driving mobile-enabled virtual card solutions for banks and their commercial customers. Commercial cardholders register their corporate card account and prove their ownership within minutes. They then generate virtual cards in real-time with spend limits and controls in the Extend app as well as send those to recipients for their use. Such technology across the industry is becoming more commonplace. Many banks have their own apps and similar spend management solutions—or are working with a third-party technology provider—around the virtual card engine. The technology allows recipients to simply download an app and tap to provision their virtual card into their device’s mobile wallet for use—providing a more secure and convenient digital payment method.
Another benefit for banks is oftentimes there is no technical implementation required. That means even small companies without a large IT team don’t have to set up and implement the solution that may normally take years to develop and bring to market.
For merchants, this leads to higher transaction approval rates and more completed sales, among other improved business outcomes.
It’s just one way TSYS is modernizing payments needs around virtual card technology.
“Virtual card and digital wallet technology is shaping the future of digital payments for banks, merchants and consumers,” said Brian Greehan, head of B2B Solutions at TSYS. “At TSYS, we are prioritizing payment modernization and fostering a more connected financial services system for our bank customers that leads to a convenient and safe online checkout experience.”
Business-tested, bank approved
To get started with the VPP solution, banks and their fintech partners register and access the latest REST APIs made available by TSYS on our Developers Portal. TSYS Developers Virtual Payment APIs are used to create a virtual account, maintain virtual account attributes, or request information about virtual account information. The service provides real-time 24/7 access to virtual cards. It also supports any virtual card in any currency.
Tightly integrated into TSYS’ industry leading core commercial issuing platform, the solution enables banks to launch on the same card processing platform, interfaces, accounts they currently use for their plastic commercial cards. VPP is also the first true single or multi-use virtual card product, that supports mobile device tokenization required by both Visa and Mastercard and facilitated by the largest mobile wallet providers, like Apple Pay.
Don’t ditch your physical cards, yet
Despite the advantages in virtual card payment technology, many employees and merchants will likely continue to prefer plastic commercial cards for years to come. Physical cards will continue to have their place in meeting the needs of many commercial payments. Keeping a physical card on hand will also solve any in-person digital merchant acceptance limitations.
Find out more
If you’re interested in learning more about the VPP solution, the TSYS and Extend partnership, or how we can help your business and customers, please reach out to [email protected].
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