Startups gain an edge with fast VCN payments

Virtual card numbers (VCNs) can be a game-changer for companies that use them strategically. Integrating with your bank’s virtual card service, your business can generate VCNs — secure, random 16-digit credit card numbers — for use with a specific transaction or set of transactions. Another approach is to issue virtual cards through a spend management solution integrated with your commercial card program.

Along with reducing risk, making VCN payments helps you increase efficiency with a fast, policy-controlled way to manage vendor payables, procurement, business travel and more.

Businesses such as e-commerce marketplaces have led the charge in using VCN payments. Once they receive payment from customers for product orders, they must quickly pay the merchants that supply what was purchased. By linking their platform directly to their bank’s VCN payment service, the company can automatically generate high volumes of payments.

VCN payments in action – real-world use cases

SVB clients are using VCN payments to streamline service delivery and enhance customer and vendor satisfaction. For example, a tech company provided an app that connects stranded motorists with nearby tow truck drivers, locksmiths and other roadside assistance. After a service was completed, the customer would pay through the app, and behind the scenes the company immediately reimbursed the service provider. Having their system integrated with SVB enabled the business to automatically generate a payment request to create a VCN for the agreed-upon amount.

Innovation economy companies are using VCNs to:

• Build a network of business partners. Companies with a business model that relies on other service providers benefit from automated virtual cards to pay them quickly and accurately.
• Increase cost controls. The ability to issue each VCN payment for a specific amount reduces the potential for fraud or being overcharged. Across hundreds of payments issued daily to a wide array of vendors, it helps a business ensure only the correct amount is paid out each time.
• Simplify reconciliation. API banking enables companies to create customized information fields to fill in additional details about the vendor or the transaction, or to create reference numbers or categories that help organize the payment data. Having richer detail makes it easier to reconcile transactions and streamline accounting, as well as accumulate other data that can be mined for insights.
• Remove obstacles to growth. Once a company’s systems are linked to their bank via an API, they can automatically generate as many VCN payments as they need. For fast-growing businesses managing payments at tremendous scale, automation is essential. Processing checks or reconciling hundreds of conventional card transactions each week would be too time-intensive and costly. To avoid derailing productivity and profitability, VCNs give businesses efficient technology that can keep pace with rapid growth.

Business Models Built on VCNs

E-commerce marketplaces: Many online marketplaces don’t keep the goods they sell in inventory. Instead, they can offer a wider range of options to shoppers by displaying items sourced from a large number of other merchants. By connecting their e-commerce platform to their corporate card issuer’s systems via an API, the business can automate VCN payment requests to pay suppliers as items are sold.

Service-on-demand offerings: A new breed of tech innovators has sprung up to connect customers to on-demand services, like speedy food delivery, house or office cleaners, and automotive assistance. When a user requests a service through an app or website, the company engages the appropriate service provider and can immediately pay them by auto-generating a VCN payment for a specified amount.

Learn more about how to take advantage of virtual card numbers via SVB’s commercial card program.