4 Reasons Why You Should Avoid Virtual Cards for B2B Payments

Virtual cards for B2B payments and businesses


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4 Reasons Why You Should Avoid Virtual Cards for B2B Payments


Virtual card usage is growing quickly around the world. Although virtual cards may be a good alternative to traditional credit cards, they are not suitable for B2B payments. Find out why businesses should avoid virtual cards for B2B transactions and why direct debit is a better alternative! 

What are Virtual Cards? 

Virtual cards are virtual credit cards that generate a new credit card number every time you make a payment. 

Virtual card usage is growing at a rate of 10% annually as more people are making payments online and looking for easier and more convenient alternative payment methods

More importantly, it protects users from credit card fraud because of its ever-changing credit card number. 

For such reasons, virtual cards can be useful for consumers who make frequent credit card payments online. 

Virtual cards, however, are not so friendly for businesses that conduct frequent business-to-business (B2B) payments (and for certain consumer-to-business, or C2B, businesses as well). 

4 Reasons Why You Should Avoid Virtual Cards for B2B Payments  

1. High credit card processing fees 

Credit card companies are notorious for their high processing fees–and credit cards going virtual doesn’t mean their processing fees will go away.  

Businesses still have to pay high processing fees for virtual card payments. For most credit card companies, the fees they charge for credit cards and virtual cards are the same. 

The average credit card processing fee ranges from 2.7%  to 3.9% per transaction. The specific fee depends on the type of business, credit card, and payment network (e.g. Visa, Mastercard, American Express).

Plus, you may need to pay additional fees for whatever online payment processor you are using. This includes monthly fees, currency conversion fees for international transactions, and other hidden fees such as PayPal’s card verification fees and Stripe’s 0.25% payout volume fee

These fees can pile up quickly and hurt your business’ profit margins! 

2. Painful refunds process 

Refunding or receiving refunds with virtual cards can be a real pain. 

With traditional credit cards, businesses send payments back into the same card that was used to make the payment. 

Because virtual cards use a one-time use card number that expires after each transaction, businesses cannot send the payment back into their client’s credit card. 

Instead, businesses can refund their clients by using checks and future credits, but this means more hassle for you and your client. 

3. Virtual cards cannot process recurring payments

Businesses cannot accept virtual cards for recurring payments because virtual cards generate a different credit card number for every payment users make.

As a result, to process recurring payments, the payee has to manually charge the payor every payment period, while the payor has to input their virtual credit card information every time they need to make a payment. 

Once again, this means more hassle for you and your client. 

4. Processing virtual cards can be manual and complicated

Although most payment processors process credit cards and virtual cards the same way, some payment processors may not support virtual cards. 

In that case, businesses need to go through the complicated process of retrieving the full virtual card information and manually inputting the information into their payment processor. 

Imagine having to do that for every virtual card payment you receive–that’s a lot of time wasted!

(Contact your payment processor company to check if your payment processor accepts virtual cards.) 

Alternative Payment Method for B2B Transactions

You may be thinking, “So what payment method is best for my business?” 

The best alternative to virtual cards for B2B payments is direct debit because it offers the same level of security as virtual cards but without the four problems listed above.

As you read in our blog post on direct debit, you know that it is an alternative bank to bank payment method that is efficient locally. However, setting up a direct debit payment system can be a time-consuming process, especially if it is an online one-time payment.

You would also need assistance from a bank or an ACH processor to accept funds via the ACH network.

Plus, direct debit is limited in its international reach as there is no global direct debit network or solution, so for businesses that conduct frequent international B2B payments, this can be a serious problem. 

There is clearly a need for an alternative payment method where credit cards, wires and direct debit fall short. That’s where borderless™ comes in.

Introducing borderless™ : Online bank payment processor

The best solution for making and accepting B2B payments for your business is borderless™. It is a local and international direct debit solution made for the digital age. 

All the benefits of virtual cards 

  • Lower fees
  • Recurring payments
  • Easy refunds
  • Ease of use & payment tracking

= borderless™ 

With borderless™, your business can make simple and affordable international and local B2B payments in seconds. 

Here are the top reasons why borderless™ is better than virtual cards: 

Low and capped fees

borderless™ is 3x cheaper than credit cards, saving up to 67% on payment processing fees. We also offer low tiered pricing for B2B payments, with rates of 1% with a max fee of $5 for the first $2,000 plus a 0.1% fee on any amount above $2,000. 

Check out our Savings Calculator to learn exactly how much you would save. 

Recurring local & international payments automated 

Make or receive global recurring payments without additional fees and hassle with simple setup. No code and no training required. Our smart system can automate recurring international payments using our global direct debit infrastructure. 

Just set up the payment, and we’ll do the rest, so that you can focus on what matters most for your business!

Private and secure

Never share your sensitive banking information again. With borderless™, you can request payments without sharing your bank details. Can you imagine invoices with bank details? We also use bank-grade security protocols and highly sophisticated data encryption tools to keep your information safe. 

For additional peace of mind, you can track your payments, so that you know exactly where your payments are real-time.

Easy to use

Make and receive payments from all around the world in seconds. You can request a payment from anyone using just their email or simply send your unique PayMe™ link to your client to get paid.

Integrating the borderless™ payment gateway to your website is also as simple. They offer both code and no-code integration methods accommodating for businesses of all sizes and types.

Easy and free refunds

Make free and easy domestic and international refunds with a single-click on your borderless™ dashboard. There are no hidden or additional fees for refunds. 

You can also choose to refund your clients in full or partial. No hassle, as it should be!

Sign up today with code GETSTARTED21 to start saving time and money.

Still not convinced borderless is right for you? Schedule a demo today to see the product in action.

It’s time for simple payments so you can focus on growing your business!

Get borderless. 

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