Virtual cards for e-commerce – Why do the merchants or companies on e-commerce platforms need virtual cards?

E-commerce has always been an open land for businesses or shop owners since it was born in the 2000s when people entered the dot com era.

Throughout its development, business owners or merchants on the floor have always sought the best possible way to solve the payment problem on the floor when it is difficult to check the amount of monthly income and expenditure, including cash refunds, imported goods from large marketplaces such as 1688 or TaoBao, etc. of China or Amazon of the US.

That problem is still a difficult problem when the shop owner on the floor or the business owner has to manage too many different document files related to money and manage too many different payment accounts, leading to errors in financial report inventory.

Many payment options have been offered; however, they only solve part of the problem until virtual cards for e-commerce are released to the market.

So, what is a virtual card for e-commerce and why do the merchants or companies on e-commerce platforms need virtual cards? Let's find out with FinFan in the following article.

What are virtual cards for e-commerce?

Like other types of virtual cards, virtual cards for e-commerce also include the basic components of a regular credit card such as the name of the cardholder, card number, IBAN, and CVV number.

At the same time, it is also issued by a fintech company affiliated with the bank in online form and has no or rarely over-the-counter withdrawal function.

On the other hand, they can be used once and then ask for new permission for subsequent uses (payment information will be saved on the system).

The only difference with this card is that it is used for purposes related to e-commerce activities such as managing spending on wholesale purchases at marketplaces, managing revenue from many other subjects as well as money lost from returned orders, etc.

Why do the merchants or companies on e-commerce platforms need virtual cards?

As mentioned above, merchants have 2 purposes for using virtual cards:

• Payment to distribution agents or goods suppliers

Paying distributors and suppliers of goods is a challenge for merchants selling on e-commerce platforms. Imagine you import goods from 10 different shops on Taobao or 1688, how can you manage all the invoices and documents as well as the amount of money in your account without errors?

Merchants often have a lot of headaches with invoices, and documents along with these financial numbers, which leads them to often encounter many errors in inventory and management despite having tried many ways to streamline those troubles before.

Since virtual cards were born, they have solved many problems related to spending management on the system.

Now, after each payment to any supplier of goods, the merchant only needs to cancel that credit card after each payment, or each virtual credit card is given a limit that only covers spending the amount of money for that exact supplier.

This will make it easier for merchants to compile financial data for their shop, know exactly how much money has been spent on each vendor, and then have the most appropriate calculations for the next expenses for each vendor so that errors do not appear on the merchant's financial statements.

• Manage spending in the operating system.

Anyone who has ever opened an online shop must go through a different multi-platform selling stage and each platform will have a different policy and advertising fees.

For example, if merchants can sell clothes on Shopee, they can also update their products on their website, Facebook, and Instagram, and then they use the TikTok platform for branding and sales with short videos. At this time, they need a unified platform to be able to manage the amount of money spent on advertising activities mentioned above, virtual cards will be a suitable solution.

With these virtual cards, each merchant's marketing team can set the appropriate budget for each platform and consider whether to cut or add the budget to which platform, then apply for an additional virtual card specifically for this one.

• Issue virtual membership cards to loyal customers.

Loyalty is a potential incentive program for all customers who have used a merchant's products for a long time and tend to return to buy many times.

However, offering and splitting incentive limitations for these clients is also a huge pain for many shop owners because every day they have to keep a lot of different contact information and don't know how to synthesize that information into a specific software.

To tackle that problem, e-commerce shop owners must have a mechanism to give their loyal consumers virtual cards connected to the exchanges or their website itself so they can participate in cashback programs or accrue points to exchange for presents that the shop is operating.

When using the virtual card service, online shop owners may entirely build virtual cards to purchase items and implement cashback programs for consumers in the simplest way because of the capacity to integrate all information into the system in the shortest and most effective method.

Conclusion about the virtual card for e-commerce

With the development of SaaS companies or more closely BaaS today, the embedded finance functions of a business are also constantly improving and one of those features is a virtual card.

Virtual cards are valuable not only in the travel service business and OTAs, but also in the e-commerce channel, where they let online shop owners pay material suppliers and other social media sites where they sell. It also helps shop owners build closer relationships with their loyal customers.

Therefore, choosing a business that can provide these products and services well for them is a very important issue.

For that reason, they need the following 3 criteria to find a company that provides this service for them:

• Companies must have an extensive international partner network to help them connect with international suppliers of goods and products and import and pay for these items as quickly as possible.

• The created virtual card account must be a multi-currency account (due to the need to import goods from many countries around the world).

• Have a solid customer service team that can assist them with account-related difficulties and account-related utilities such as payment issues, as well as providing perks to final users.

About FinFan

FinFan is a cross-border embedded financial services company that focuses on mass disbursement, fund collection, card processing, IBAN, and digital APMs solutions, which can provide valuable input and integration on and for the same.

FinFan is already integrated with almost the world's well-known MTOs, PSPs, switch, and core fintech platforms such as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, etc.

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