Traditional vs. Virtual Payments: Why Modern AP Teams Are Making the Switch

What if your company’s payment process is slowing you down and costing more than it should? Many AP teams assume their mix of corporate cards, checks, and ACH payments is working well enough. But hidden inefficiencies, security risks, and missed rebate opportunities quietly drain resources and profitability.

Think about it: How much time does your AP team spend manually reconciling transactions? How often do late payments strain supplier relationships? How much revenue is left on the table due to missed rebates? You’re not alone.

According to the Association for Financial Professionals, nearly 73% of companies are transitioning away from traditional B2B payment methods in favor of digital solutions. Virtual payments, particularly virtual cards (vCards), are gaining traction as AP teams realize that outdated methods increase costs, slow workflows, and create unnecessary risks.

For finance leaders, the real question isn’t whether virtual payments are the future, it’s how soon your organization can make the switch.

The Problem with Traditional Corporate Cards

Corporate cards have long been a go-to payment method, but they introduce challenges that create unnecessary complexity for AP teams.

One major issue is the lack of control over how and when payments are processed. Once a corporate card number is shared with a supplier, it can be stored and charged repeatedly, making it difficult to prevent unauthorized transactions. Unlike virtual payments, corporate cards don’t allow for per-transaction restrictions, expiration dates, or automated controls to align spending with AP policies.

Other key challenges include:

• Security risks – Fraud remains a top concern, with check fraud alone accounting for over $20 billion in attempted theft in 2023. Corporate cards lack built-in security controls, making them vulnerable to misuse.
• Reconciliation inefficiencies – Traditional card transactions lack detailed data, forcing AP teams to manually track invoices, verify charges, and resolve discrepancies. This leads to month-end close delays, reporting inaccuracies, and increased administrative overhead.
• Processing costs – Businesses relying on paper checks spend anywhere between $4 to $20 per check in processing fees, postage, and labor. Corporate cards may also come with hidden costs when not managed effectively.

The inefficiencies of traditional corporate cards do more than create headaches. They take a direct toll on your bottom line. The good news? There’s a better way.

Why Virtual Cards Are the Smarter Choice for AP Teams

Virtual cards provide a modern alternative to traditional corporate cards, offering businesses greater security, control, efficiency, and financial benefits. Unlike physical credit cards, which can be lost, stolen, or misused, a virtual card is generated digitally and tied to a specific invoice, supplier, or spending limit.

Stronger Security and Fraud Prevention

Fraud risk is one of the biggest concerns with traditional payment methods. Virtual cards eliminate this issue by generating a unique payment number for each transaction or supplier, making unauthorized charges impossible. Unlike corporate cards that remain active indefinitely, virtual cards are one-time-use or limited-use, significantly reducing fraud risk.

For example, imagine an employee accidentally shares a corporate card number with a fraudulent supplier. With a traditional card, that information could be used repeatedly. With a virtual card, however, the number expires after the approved transaction, making it useless to fraudsters.

Automated Reconciliation and Real-Time Visibility

Month-end reconciliation shouldn’t feel like a guessing game. Traditional credit card statements often lack detailed transaction-level data, requiring AP teams to manually match invoices, chase down receipts, and verify charges.

With virtual cards, payments are automatically linked to invoices and suppliers, eliminating these pain points. Instead of spending hours tracking down missing details, AP teams gain real-time visibility into every payment, ensuring that transactions match invoices instantly.

Scalability to Support Business Growth

As businesses expand, their payment needs become more complex. Virtual cards scale effortlessly, handling increasing transaction volumes without adding administrative burdens or additional costs. Unlike traditional payment methods that require manual oversight and account management, virtual payments integrate seamlessly into automated AP workflows, ensuring that payment processes remain efficient, even as transaction volumes grow.

Spend Control and Compliance

Unlike corporate cards, which allow unrestricted spending, virtual cards provide precise control over how much is spent, where, and by whom. Companies can set:

• Per-transaction spending limits to prevent overcharges.
• Expiration dates to ensure suppliers can’t charge after the payment is complete.
• Supplier restrictions to keep payments aligned with approved supplier lists.

These controls prevent unauthorized transactions before they happen, eliminating the need for AP teams to track down improper charges. Additionally, virtual payments enhance compliance by providing a clear, digital audit trail that simplifies regulatory reporting and ensures adherence to industry standards. The ability to track every transaction in real time makes audits faster and reduces the risk of financial discrepancies.

Cash Flow Optimization and Rebates

Virtual cards don’t just enhance security and efficiency, they also offer significant financial advantages. Businesses using vCards often earn rebates on payments, turning AP into a revenue-generating function instead of a cost center.

Beyond cost savings, virtual payments give companies greater control over cash flow. Unlike checks or ACH, which immediately withdraw funds, virtual payments allow businesses to:

• Optimize working capital by choosing the best payment timing.
• Capture early-payment discounts from suppliers.
• Avoid late fees and improve supplier relationships by ensuring payments are on time.
• Better align outgoing payments with incoming revenue, creating a more predictable cash flow cycle.

JetBlue, for example, leveraged virtual card payments to eliminate manual payment bottlenecks, reduce processing delays, and capture significant rebates. See how they did it here.

Elimination of Paper-Based Processes

Paper-based payments are slow, costly, and inefficient. Printing, mailing, and manually processing checks add unnecessary expenses and delays to your AP workflow. These outdated methods also increase the risk of lost payments, fraud, and reconciliation errors.

By shifting to virtual payments, businesses:

• Reduce processing time from weeks to just days or even hours.
• Eliminate lost or stolen checks, reducing fraud risk.
• Lower operational costs by cutting out paper, postage, and manual handling.
• Increase efficiency with automated approval workflows and instant transaction tracking.

Despite the clear advantages of virtual payments, some businesses still hesitate to make the shift. Let’s take a look at the most common concerns and why they don’t have to hold you back.

Addressing Barriers to Virtual Payment Adoption

Worried your suppliers won’t accept virtual payments? You’re not alone, but adoption is growing fast. Many suppliers now prefer vCards because they speed up payments, lower processing costs, and reduce fraud risk.

Concerned about integration? Most virtual card solutions are designed for seamless integration with ERP and accounting systems, making implementation smoother than expected.

Wary of change? Sticking with outdated payment methods is costing your business time and money. The longer companies delay, the more they miss out on cost savings, security, and efficiency gains.

Making the switch may seem overwhelming, but with the right guidance, it’s easier than you think. Virtual payments are a smarter choice. They’re a seamless upgrade when you have the right tools and support.

onPhase: Your Partner for Smarter AP Payments

Transitioning to virtual payments doesn’t have to be complicated. onPhase makes the shift seamless, helping businesses eliminate inefficiencies, reduce costs, and improve supplier relationships without disrupting existing workflows.

Why AP Teams Choose onPhase:

• Up to 70% cost savings on payment processing.

• Accelerate supplier payments and strengthen relationships with faster, more reliable transactions.

• Gain full visibility into invoice status, approvals, and real-time reporting.

• Integrate effortlessly with ERP and accounting systems for a smooth transition.

• Ensure top-tier security and compliance with SOC 2 certification and fraud prevention tools.

With onPhase, businesses gain more than automation. They gain control, visibility, and the ability to scale efficiently.

Take Control of Your AP Process

Why wait? Every day spent on manual payments is a missed opportunity to save time and money.

Let’s talk about how onPhase can help you streamline AP and turn payments into a profit driver. Schedule a quick call with one of our automation experts today. No pressure, just solutions.