A Green Path is Key to Virtual Credit Card Adoption

The adoption of a new technology is rarely smooth sailing and virtual credit cards (VCC) are no exception. While in theory, a virtual card will save time and streamline processes for your business, actually getting the card number into the hands of your employees is not always without hurdles. One of the biggest challenges to virtual credit card adoption has been the verification process.

However, thanks to TravelBank and U.S. Bank, the path of least resistance is now a reality for corporate cards.

In this post we’ll focus on barriers to virtual credit card adoption, provisioning, and the latest market developments pertaining to VCCs for your business.

What is a virtual credit card?

A virtual credit card is a unique 16-digit account number similar to a traditional corporate credit card–except there’s no physical plastic card.

As a business, you can set spending limits, restrict merchant categories codes (MCCs) and set an expiration date for the virtual cards your provision to employees so they deactivate automatically. For more information on virtual credit cards, take a moment to check out our recent blog post.

Barriers to Virtual Credit Card Adoption: Verification

Now that we know what a VCC is, let’s take a few minutes to dive into virtual credit card provisioning technology and why it’s particularly difficult to verify employees as virtual corporate card holders.

In an effort to reduce fraud, sensitive credit card data is replaced with a token, or a number that is generated by an algorithm. As noted by Square Up, “Tokenization allows users to store credit card information in mobile wallets, ecommerce solutions and POS software to allow the card to be recharged without exposing the original card information.”

As you can imagine, these security measures can often lead to user friction. For instance, Apple Pay requires participating card issuers to require additional bank verification steps to provision the card, which is known as a “Yellow Path”. While great from a security perspective, this can cause delays in issuing the card number and make the process cumbersome for employees.

A yellow what??

Yellow, Red, and Green Pathways Explained

As explained by Cherian Abraham, Vice President of Digital Identity Platforms at Experian, Apple Pay handles card provisioning requests in one of three ways:

• Red Path: The provisioning path is denied without referral to the issuer.
• Yellow Path: The provisioning request is referred to the card issuer for an approval decision.
• Green Path: A virtual credit card is provisioned without referral to the issuer

Abraham notes, “It is the Yellow Path that is causing the issues, since banks are not currently well positioned to make this kind of decision.”

Provisioning, Verification, and Frustration

Essentially, when your finance team issues a virtual card, Apple Wallet has no way to verify the information, and it gets held up in your wallet until the bank can verify the recipient’s identity and approve the card for their use. At this point, your employee is sitting around waiting, unable to make work-related purchases, such as booking airfare or securing materials for a project, via a corporate account.

Today, depending on your card issuer, you could expect a ton of variance such as being directed to the credit card issuer’s call center, being asked to authenticate via the bank’s mobile app, or an entirely other multi-factor verification process.

As one can expect, each has varying levels of success and friction, with just a few banks opting to authenticate via their mobile apps, which would have provided a far easier, customer-friendly provisioning experience. It is also a massive barrier to virtual credit card adoption.

A green path is critical.

A Changing Market: U.S. Bank Figures Out the Green Path

Until recently, financial institutions have not figured out how to provision a virtual corporate credit card without a referral to the issuer. U.S. Bank has successfully cracked the code through a proprietary verification technology that confirms identities and passes that information to Apple Pay, letting them know a person is verified to use the card–reducing friction and streamlining processes.

Once issued, employees can use their virtual cards or integrate them with Apple Pay instantly. As of today, other banks don’t have the technology to deliver this experience. Many are dependent on third party data and apps to register your card and identity before moving it to the mobile wallet. Some financial institutions have announced they are partnering with technology to try to solve this problem, but currently, U.S. Bank is the only bank that can allow companies to provision virtual corporate cards instantly, with its aptly named Instant Card.

The Business Benefits of Virtual Credit Cards

When expenses for things like supplies, materials, or travel arise, employees may have to pay for these items with a personal credit card and then seek reimbursement if they are awaiting a physical or virtual corporate card. From an account reconciliation perspective, the process is often time-consuming and slow, not to mention prone to errors and possible fraud.

If your workforce is leveraging virtual credit cards, your finance team will save time and streamline processes with complete management, travel, and payment solutions. Here are some of additional benefits:

Control Spend & Gain Visibility

Your company can issue unlimited Instant Cards, and set unique budgets and expiration dates for each card. Shifting from personal cards to virtual corporate cards helps your company manage all spend in one place and allows your accounting team to track spending and compliance in real-time.

Enable Contactless Payment

Employees can use assigned virtual cards for online payments immediately. For physical payments, they have the option to integrate securely with their mobile wallet. Remember that most cards, other than U.S. Bank Instant Card, require additional bank approvals when integrating with a mobile wallet, that can delay the cards availability.

Integrate Expense Reporting

Your accounting team can manage budgets and review virtual credit card transactions in TravelBank for real-time visibility. Submitted expenses automatically sync with your general ledger for easy reconciliation.

Travel Booking Made Easy

Managers can create a trip budget and let travelers book in the TravelBank app. When employees integrate their provisioned virtual corporate card with their mobile wallet, they can show that to confirm check-in at hotels rather than request a faxed card authorization.

TravelBank + U.S. Bank’s Instant Card

With the percentage of consumers preferring businesses that offer pick-up, curbside, or contactless service increasing from 13% to 49% since the spread of the COVID-19 pandemic, virtual credit cards are now an essential component to corporate expense management.

The U.S. Bank Instant Card is a fast, efficient, and easy way for businesses to extend purchasing power to employees without giving up control by allowing organizations to set spending limits, block merchant categories codes, and customize expiration dates specific to a business purpose.

Paired with the TravelBank app, businesses can issue virtual cards to an employee needing to purchase laptops for remote work, a consultant buying materials for a project, or a candidate traveling to interview for a new position in just a few clicks, and track that spend as it occurs.

If you’d like to learn more about how TravelBank and U.S. Bank work together to streamline expense and travel, let’s talk. Our team is on standby to answer your questions. Click here to set something up.