opting out of a virtual card

The Power of Opting Out of a Virtual Card

Imagine yourself physically exhausted while approaching the finish line. However, the marathon official informs you that you have to run two more laps in order to complete the race. That’s quite a nasty surprise, isn’t it? A majority of America’s public and private small businesses represent the infuriated runner described above. Why? Because virtual card networks surprise them with outrageous transaction costs just after getting signed up.

Did you know that some virtual card companies can charge a transaction fee ranging from three to five percent of the entire transaction cost? As you can surmise, this can lead to surprise and discontent with those that are required to accept payment on a virtual card.

How to Opt Out of a Virtual Card Network and Minimize B2B Transaction Costs

Small and medium-sized businesses in different industries are rapidly switching from traditional checks to virtual cards. As a supplier, you can stand your ground against virtual card payments by following these guidelines.

1.     Define your preferred modes of payment to both new and existing clients.

Companies require sufficient working capital in order to sustain their daily operations. Any delay or shortfall in working capital leads to downtime. It takes three to five days for commercial banks to process card payments. However, virtual card payments take longer. If a majority of your clients prefers to pay you using this method, you may end up with piling bills and unpaid employees.

It’s important to inform your clients about your reasons against virtual card payment. Ensure that your payment policies appear on your company’s website, invoices and project quotes.

2.     Request the client to initiate the opt-out process.

Some virtual card networks are notorious for enrolling the payee without seeking consent. To make matters worse, they apply unfriendly cash withdrawal rates. The question as to who should bear the payee’s transaction costs is still a thorny issue. However, the buck stops with virtual card networks because they don’t inform buyers of the payee’s transaction charges.

When a client informs you that he or she just cleared their invoice using a virtual card network, speak up against this form of payment. Tell them to contact the virtual card network and reverse the transaction.

3.     Review all your clients’ contracts.

As an additional measure of ensuring that all your clients understand your modes of payment, consider reading through your legal agreements. To avoid confrontations with future clients, it’s advisable to explain that you only accept traditional credit and debit card payment. Contact your clients and inform them of the new revisions to the terms and conditions of your binding agreements.

4 Benefits of Opting out of a Virtual Card Network

1.     Reduced payment processing duration.

When buyers settle payments using virtual cards, you the supplier have to spend time and energy feeding the cards’ details into financial records. Since this is a manual process, it may take a week or longer for accountants to enter and verify the data. Opting out a virtual card network saves you from this inconvenience.

2.     Reasonable transaction costs.

The average rate per transaction payees incur for withdrawing payments from virtual card networks is three percent. If you’re dealing with an overseas client, you’re likely to receive a lesser amount because the commercial bank handling the transaction may use biased foreign exchange rates. The best approach is advising international clients to pay for their goods or services using wire transfer.

3.     Avoid lengthy follow-ups.

Companies that receive virtual card payments have to spend many hours on the phone. One has to ensure that their commercial bank receives the correct virtual credit card details. If the bank spots any errors, you’ll be required to contact the virtual card company and request them to make corrections. Then, the entire process starts all over again.

4.     Improved client relations.

By clearly explaining your preferred modes of payment, you’ll leave no room for misunderstanding. You’ll receive your payments on time and at lower transaction rates compared to virtual card networks. Companies that receive massive payments via virtual cards usually argue with clients over who ought to clear the payee’s transaction fees.

Summing It up: the Power of Opting out of a Virtual Card

It’s obvious that virtual card networks favor the buyer more than the supplier, who’ll end up bearing high transaction costs and lengthy payment processing duration.

Do you need additional advice on the power of opting out of a virtual card? Contact APVelocity at 800-707-4854 to learn more about our fast payment solutions.

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