‘AI potential of virtual cards could boost efficiencies’

Anant Patel, president of international markets at ConnexPay, talks to Anjana Haines, The Payments Association’s editorial director, about why virtual cards are growing in global popularity, particularly among corporations, and how the payment method will evolve to utilise AI technology.

Virtual cards have been growing in popularity. What’s their potential?

Virtual cards have significant advantages over traditional payment methods. They can be created quickly and easily, used for one-time or multiple purchases, offer increased security, and handle high volume business payments. But they also reduce risk and fraud.

Talking about the popularity of virtual cards, I would go as far as saying that we’re probably in the realm of over U$100 billion a year of virtual cards being used globally.

In its true sense, when you make a transaction online you are making a virtual payment transaction. What we find is that the popularity is growing because companies like ConnexPay are removing the friction.

Another benefit is they’re easily integrated into digital wallets and digital payments – the younger generation don’t utilise any other forms of payment. So, digital payments are growing in popularity and virtual cards are a part of that.

Finally, there are significant amounts of controls you can put on virtual cards like one-time use only, allowing the card to be live only on a certain date, only using it at a certain merchant, or in a specific currency for a certain amount.

So, people are finding that it’s ultimately reducing risk, therefore the popularity is increasing because people feel safer using them. We can do high volumes of transactions and it is fitting into the digital wallet.

Virtual cards are popular worldwide and I have seen it accelerate and grow by hundreds of percents yearover-year. We’re seeing huge adoption within travel, as well as hospitality and e-commerce. It’s going to continue to grow globally.

So, what you’re finding is it’s a secure way of doing payments and people are far more excited, accepting and receptive of it.

A significant growth area for virtual cards has been among corporations. Do you see this trend continuing?

Yes, I do. Businesses are there to make profit and add significant value to their customers and their shareholders and there are many ways of doing that.

One of the ways that our customers are doing that is by driving out the pain in their payments process [and] creating more efficiency. When you drive more efficiency, you can pass on that benefit to consumers and grow your business.

What we’re finding is that businesses are the biggest adopter of virtual cards in mass. For example, there are global travel companies that are producing multiple virtual cards per second to pay hotels or airlines or ground transportation – to the tune of billions of dollars a year. I don’t see that slowing down in corporates – I see that growing.

Mastercard said the size of the B2B market is over $130 trillion globally and growing at significant pace. With that in mind, we’re only scratching the surface with a virtual card, which is an efficient way of paying. We want to drive out inefficiencies for the businesses we serve and simply connect payments, reduce costs, make it more efficient and help grow their business.

How popular are virtual cards among retailers?

The way I look at this is the benefits of issuing, paying and receiving a virtual card outweigh the costs related to it.

There is a huge amount of fraud that we know happens globally and companies are trying to drive fraud out of everything because it affects their bottom line. So, we’re finding that we’re having a major impact on reducing fraud because of all the benefits, such as having one-time use only cards, set values, currencies and activity periods on the cards.

If retailers accept virtual cards, they will grow their revenues because more people will buy from them, as well as reduce fraud. It also increases their cash flow. For example, a lot of retailers wait for payments to settle over a period of days, but virtual cards allow these retailers to receive their money quicker, creating a positive impact on cash flow.

What about the future of virtual cards? How could they work with crypto assets, Web3, or the metaverse?

Our virtual cards can work with crypto assets, Web3 and the metaverse.

On crypto assets, we can link a virtual card with a crypto wallet. When we link to a crypto or a decentralised finance platform, we allow that card to be stored and you can trade and transfer cryptocurrencies. The connection allows users to convert crypto assets to fiat currencies.

It can work with Web3 applications as well, which are decentralised applications that operate on blockchainbased platforms and it allows users to earn crypto assets and then, by completing tasks, they can use a virtual card to spend those assets. We can see that happening online a lot.

Virtual cards can also be used to make payments in the metaverse – a fictional world that operates on a blockchain platform or blockchain-based platform – to purchase virtual goods, services and assets.

Ultimately, a virtual card acts as the bridge between the traditional finance systems that we know, and the new blockchain-based ecosystems. Things are evolving.

How could virtual cards work with AI?

We are looking into what AI can do for us and [how] virtual cards could coexist with it.

One way is just to analyse spending patterns. So, I spend most of my money at food places –the AI could provide a list of recommendations on restaurants based on where I’ve eaten.

The other thing AI can do is help with the security features of virtual cards, because being able to learn, detect and prevent fraudulent transactions in real time would help reduce fraud. Sometimes it takes a few times before fraud is caught but if you’re able to reduce it, even by one transaction, you’re saving significant money.

Then, there’s automatic expense tracking. We’ve been able to use AI in a transaction and populate expense systems with the information that’s pushed through.

I believe that integrating AI and virtual cards can provide significant financial solutions, but also add value to the whole ecosystem of payments around reducing fraud and making things faster.

As an organisation, we’re always thinking about what the future holds. We talk about our vision being simply connecting payments and we do that through virtual cards.