Visa is readying a new accounts receivable (AR) tool to make virtual card acceptance easier for merchants.
The company’s AR Manager will be available for a limited pilot next month as businesses increasingly turn to virtual cards as the preferred method for processing AR, according to a Monday (Oct. 23) press release. Availability will widen next year.
“[V]irtual card acceptance can be an incredibly manual, time-consuming and costly process — potentially occurring dozens of times each day and often with different protocols for each bank a merchant is receiving payments from,” the release said.
Visa AR Manager will automate virtual card transactions by retrieving card account details, initiating authorization and clearing, and then providing reconciliation data to close out invoices in the supplier’s enterprise resource planning (ERP) system.
“This innovation is a direct result of deep, meaningful conversations with our valued partners and customers, who have highlighted the friction they experience today with virtual card transaction processing,” said Visa Commercial Solutions Global Head of B2B Acceptance Abhishek Abhishek in the release. “Visa AR Manager will enable us to create an optimal transaction experience for our commercial customers, automating an antiquated process and transforming the way they work.”
Virtual card implementation can help replace outdated practices and systems that lead to delays, fraud and frustration for AP departments.
“For instance, virtual cards provide controls on a merchant level, allowing AP teams to monitor spending patterns and prevent overspending or unauthorized transactions,” PYMNTS wrote this month. “This level of control serves as a strong defense against fraud, as any malicious actor will be considered an unauthorized user by default.”
Virtual cards also provide the advantage of establishing controls before money is spent, making it easier to recover losses compared to other transaction methods.
In terms of security, virtual cards provide another layer of control for businesses as the unique and randomly-generated card numbers used for each transaction greatly lower the risk of fraud. Virtual cards are not linked to a business’s main account but to a digital wallet, reducing exposure of sensitive data.
“There’s less fraud in virtual cards,” David Bork, head of AR solutions at Boost Payment Solutions, said in an interview with PYMNTS in July. “The numbers are something like 40% for ACH attempted or actual fraud, and for virtual cards, it’s around 3%.”
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