Payment Pulse – Ep. 34

Discover how virtual cards are transforming B2B payments, helping software platforms automate workflows, improve control, and unlock new revenue opportunities.

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Episode Transcript

 

Shannon: Hey, everyone. Welcome back to the Payment Pulse Podcast. I’m Shannon.

Michelle: And I’m Michelle.

Shannon: And today, we’re diving into a topic that’s coming up more and more in conversations with software companies, and that’s virtual cards. But really, what we’re talking about is something bigger than that.

Michelle: Yeah, it’s one of those topics where if you just look at it on the surface, it sounds like a payment feature. But once you dive into it, you realize it’s actually a shift in how platforms operate financially.

Shannon: Exactly. And I think a lot of software providers are still thinking about payments as something adjacent to their product. But in reality, it’s becoming something that can live directly inside it. So let’s start with what most finance teams are still dealing with today. So B2B payments, especially behind the scenes, still rely heavily on checks, ACH transfers, and shared corporate cards.

Michelle: If you think about it, that’s kind of wild because every part of the business has kept up with the times. Sales teams are using intelligent CRMs. Operations are running on cloud-based systems. Even procurement has become automated and workflow-driven.

Shannon: Mm-hmm. payments didn’t evolve at the same pace. They’ve stayed manual, fragmented, and reactive.

Michelle: And that creates friction everywhere, not just for finance teams, but for vendors, contractors, and even customers in some cases.

Shannon: Right. And that’s really the gap that virtual cards are stepping into.

Michelle: So let’s level-set on what virtual cards actually are. At the simplest level, they’re digitally generated card numbers, no physical card, no shipping delays, no waiting.

Shannon: And you can create them instantly, assign them to a specific use case, and now, this part is key, control exactly how they’re used.

Michelle: And that’s the part that’s easy to underestimate because when you digitize a card, you turn payments into something programmable.

Shannon: Exactly. So you’re setting rules up front instead of reacting afterward. So spending limits, vendor restrictions, expiration dates, and category controls. It’s all configurable.

Michelle: So instead of finance teams chasing down what happened, they’re defining what’s allowed from the start.

Shannon: So let’s make this a little more tangible. Think about a field services company with technicians spread across multiple cities

Michelle: Traditionally, they might give those technicians access to a shared card or reimburse them after the fact.

Shannon: Which creates all kinds of issues like lost receipts, overspending, or delayed reimbursements.

Michelle: With virtual cards, you could issue a card for a specific job, set a limit, restrict it to certain vendors, and set an expiration window.

Shannon: And now the technician has exactly what they need and nothing more, and finance doesn’t have to clean it up later.

Michelle: All right. So let’s talk about why businesses are actually adopting this, because this shift is happening pretty quickly.

Shannon: So the first big driver is control. So traditional payments don’t give you much visibility until after the money is already spent.

Michelle: And that’s where a lot of the inefficiency comes from. Finance teams are constantly reacting, reviewing transactions, reconciling, trying to understand what happened.

Shannon: And virtual cards flip that. You define the rules once, and the system enforces them automatically.

Michelle: The second driver is efficiency, especially in accounts payable. Manual invoicing, check runs, approvals, it’s a lot of moving parts.

Shannon: And it’s not just inefficient, it slows everything down. Vendors wait longer to get paid, and teams spend time chasing down details.

Michelle: Virtual cards streamline that. Transaction-level data travels with the payment, so reconciliation becomes much simpler.

Shannon: Which means less manual work and fewer errors. So the third thing we wanna talk about is security. So shared card numbers create risk, especially as teams grow and become more distributed.

Michelle: Virtual cards reduce that significantly. Single-use cards expire immediately. Even if something gets compromised, there’s no ongoing exposure. And then there’s real-time visibility. Instead of reviewing spend after the fact, finance teams can see everything as it happens

Shannon: Which changes how decisions get made. It’s not reactive anymore, it’s proactive. So now all of this explains why businesses are interested in virtual cards. But for software platforms, the more important question is: what happens when you bring this inside your product?

Michelle: And this is where it becomes a strategic decision because now you’re not just supporting payments, you’re owning a critical part of your customer’s workflow.

Shannon: Mm-hmm. And you’re becoming the place where financial decisions happen.

Michelle: So let’s start with expense management. If your platform serves distributed teams, field services, or project-based businesses, this is incredibly relevant.

Shannon: So instead of sending users to a separate portal, everything happens inside your platform. Cards are issued there, limits are set there, and reporting happens there.

Michelle: And what that does is expand your role. In addition to helping them run their business, you’re also helping them control their spend.

Shannon: Which naturally increases how often they interact with your product. So now let’s take the second use case here, payouts. So this is huge for marketplaces and platforms managing contractors.

Michelle: Because payouts are one of the most painful parts of the process. They’re slow, they’re manual, and they’re often disconnected from the platform itself.

Shannon: And virtual cards change that because you can issue payments instantly, control the timing, and automatically capture the data back into your system.

Michelle: And there’s also a business upside. At scale, interchange revenue becomes a meaningful part of the model. Now, this is where things start to feel like a real shift. Virtual cards enable programmable workflows.

Shannon: So instead of someone manually initiating a payment, it’s triggered by an event.

Michelle: A purchase order is approved, payment happens. A milestone is hit, payment is released.

Shannon: And this is the key shift because payments move from being something users do to something the platform does for them.

Michelle: And that’s the difference between a feature and infrastructure.

Shannon: So let’s talk about the business impact now for software companies because this is where things really start to add up.

Michelle: There’s a clear revenue opportunity. Interchange revenue on payment volume plus premium financial features layered on top.

Shannon: But what’s interesting here is that the revenue often isn’t the first thing that shows up.

Michelle: It’s actually retention. Retention is usually the bigger immediate impact because once payments are embedded into daily workflows, your platform becomes much harder to replace

Shannon: Not because switching is technically difficult, but because your product is now doing more for them.

Michelle: You’re now part of how they run their business, not just a tool they log into.

Shannon: Mm-hmm. And then there’s the customer experience piece. So faster payments, better visibility, and less friction.

Michelle: And all of that contributes to higher satisfaction, and that shows up in retention, referrals, and overall growth. Now, if we zoom out, virtual cards aren’t the end goal. They’re a foundation.

Shannon: Mm-hmm. And it’s a foundation for programmable automated finance.

Michelle: Especially as AI and automation continue to evolve, the expectation is shifting from the software helps me manage payments to the software handles payments for me.

Shannon: And virtual cards are already built for that. They’re API-driven, rule-based, and flexible enough to plug into automated workflows. So if you’re a software platform, the question then becomes, do you wanna sit next to payments or do you want to power them?

Michelle: Because the platforms that move early are the ones that build the data advantage, the workflows, and the customer trust.

Shannon: And that’s what ultimately positions them for what’s coming next.

Michelle: All right, well, that’s a wrap for today. If you’re a software company thinking about how payments fit into your roadmap, this is definitely an area worth exploring.

Shannon: And if you wanna talk through what this could look like for your platform, we’re always happy to have that conversation. And if you’re looking for more resources like this, be sure to visit our blog at xplorpay.com. That’s X-P-L-O-R pay.com. Thanks for listening, and we’ll see you next time on Payment Pulse.