Thursday, 19 July 2018

Businesses adopt virtual cards for greater control and security

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HSBC sees increased demand for virtual card capabilities from Australian corporates and institutions.

More Australian businesses are using virtual cards to improve efficiency, control and security in their payments. According to a recent survey of mid-sized companies in Australia, nearly 60 per cent of the respondents with corporate purchasing cards are now using virtual cards.1

Companies with business interests overseas are the biggest users of the solution. The vast majority (84 per cent) of the respondents using the cards have overseas operations and nearly three-quarters (74 per cent) export goods or services.

Virtual cards are already popular in the travel industry because of their efficiency in managing high-volume, low-value payments. But other industries have also started adopting them. Of the companies surveyed by RFi Group, 36 per cent of those with virtual cards were from the professional services sector and 21 per cent were transport-dependent businesses.

What are virtual cards?

Virtual cards provide a business-to-business payment solution without the need for a physical card. They allow businesses to generate single- or multiple-use card numbers to pay suppliers. Each card and transaction is linked to a centralised account, enabling businesses to easily capture and manage payments.

According to John Scott, Country Head of Global Liquidity and Cash Management at HSBC Australia, companies have the flexibility to use virtual cards according to their needs. “They can implement this solution in a number of ways, such as a web-based portal, batch file or fully integrated application program interface,” he says.

Better operational efficiency

Businesses can have their virtual cards – which carry up to 30 additional data fields – coded according to project and merchant, allowing purchases to be automatically entered into their expense management systems. This streamlined process means fewer billing errors and less paperwork.

Virtual cards also allow businesses to consolidate all card-enabled expenditure into one corporate card program and monthly payment, making expense management more efficient.

Greater control and easier data capture

According to Justin Low, Country Head of Product Management, Global Liquidity and Cash Management at HSBC Australia, virtual cards give companies complete control by enabling them to set limits – such as when cards can be used and how much can be spent. “Businesses have full control over how their cards are being used. They can change the parameters they have set and have those changes updated immediately,” he says.

Companies can prevent card misuse and reduce the risk of fraud by generating a unique account number for each transaction and setting limits for each payment.

With no fixed account number, virtual cards can minimise the risk of having the card number stolen and re-used for fraudulent transactions.

JUSTIN LOW, COUNTRY HEAD OF PRODUCT MANAGEMENT, GLOBAL LIQUIDITY AND CASH MANAGEMENT, HSBC AUSTRALIA

When businesses create a virtual card, they can automatically capture data about payments, such as invoice number, purchase order number, department code and employee identification. In fact, they can integrate a virtual card number into their accounting system, which eliminates the need to file receipts and simplifies payment reconciliation.

Increased demand for the solution

With such compelling benefits, HSBC is seeing increased demand for virtual cards from its corporate and institutional clients.

Over the past six months, we’ve had many clients asking us about this payment solution and sending RFPs [Requests for Proposals] to provide virtual card capabilities

JOHN SCOTT, COUNTRY HEAD OF GLOBAL LIQUIDITY AND CASH MANAGEMENT, HSBC AUSTRALIA

Agribusiness, universities and the public sector are the ‘sweet spots’ for virtual cards, according to Scott, with many organisations in these sectors looking for a secure payment system that they can easily control.

Virtual cards can help agribusiness companies improve their working capital by allowing them to pay their suppliers and keep their funds for up to 45 days before paying their issuing banks. “They can receive credit instantaneously, which is extremely important for some agribusiness firms and farmers,” says Scott. “Similarly, universities can use virtual cards to bolster their working capital through extended payment terms and better efficiencies.”

Public sector organisations are also turning to virtual cards to ensure data transparency and control in their purchases, according to Grant Johnstone, Vice President for Specialist Sales at Mastercard Australia and New Zealand. “They increasingly recognise the benefits of virtual cards for efficiently managing their suppliers and controlling expenditures,” he said.

HSBC launches virtual cards

To meet the growing demand from corporates and institutions, HSBC is launching Mastercard virtual cards in Australia. The new offering adds to the bank’s physical corporate card solutions and highlights its commitment to corporate clients.

The launch follows the introduction of HSBC MiVision in 2017, a central platform where HSBC’s corporate and institutional clients can manage their cards. “It’s part of our journey to enhance our corporate card program,” says Scott. “Since the launch of the program in 2011, we have invested in enhancing our proposition to our corporate clients in Australia by introducing MiVision last year and now launching HSBC virtual cards.”

1RFi Group, Australian Commercial Banking Council Survey, March 2018.

HSBC Bank Australia Limited. ABN 48 006 434 162 AFSL 232595

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