Questions to Ask Your Virtual Card Provider

August 10, 2022

Eduardo Lopez

Table of Contents

• Questions for virtual card providers TL;DR
• Virtual card use cases and features questions
• Virtual card program management questions
• Card program pricing and terms questions
• Card program implementation questions

Virtual cards are the fastest, most cost-effective, and easiest cards to issue. They also provide an extra level of security by obscuring your associated account’s PAN.

Besides the speed, cost, and ease benefits, issuing virtual cards also adds a new revenue stream — interchange. Check out our interchange guide to learn more about how to earn by spending on your issued cards.

Your company can use virtual cards in a couple of ways:

• Issue virtual cards directly to end users. In this use case, the cardholder will place transactions with the virtual card by typing its 16-digit primary account number (PAN) directly into an information field.
• Issue virtual cards as a tool to process transactions. Here, a company will issue virtual cards to make payments. An example of this use case is Lithic customer Gordian Software issuing virtual cards within its payment platform to help airlines sell ancillary services via third-party online travel agencies.

Before launching your card program, you’ll have to choose your virtual card provider. It’s worthwhile to ask your processor a few key questions to make sure they’re the right virtual card provider for you going forward.

And if you’ve been around the virtual card block before, that doesn’t necessarily mean you know all aspects of each individual use case. Asking specific questions about new use cases will help you understand the nuances of your new product.

Questions for virtual card providers TL;DR

• Start by getting a lay of the land: Even if you’re familiar with certain virtual card concepts, you may not know the range of features and use cases available. For example, you can use single-use cards to pay vendors or reimburse employees. Or you can issue reusable cards to make recurring payments to one specific entity over a set period of time.
• Ask program management questions: A provider that gives you visibility into key processes and makes it easy to execute core functions will make your job easier in the long run. For example, a provider with a developer-friendly API will make it easy to run your card program at scale.
• Ask about pricing and terms: Understanding a provider’s pricing structure and revenue sharing practices will let you know how much you’ll earn and pay per transaction. Request a contract and read the fine print — all of it. If you don’t understand a key term or requirement, make sure to ask about it.
• Ask questions about implementation: Assessing a virtual card provider’s implementation process will alert you to any friction in their setup. Less friction equals faster implementation and faster revenue generation.

Virtual card use cases and features questions

Before investing time in a virtual card provider, confirm they support your specific use cases. And if you already have a provider but want to add a new card product, check to see if your current provider can accommodate your goals for it.

For example, if you want your card to become a cardholder’s default payment method, the card needs to be reusable. But if you’re planning to process transactions, you may want single-use PANs. If a virtual card provider can do one or none of these, you’ll want to explore other options.

Start by asking your virtual card provider these questions:

• Are these virtual cards debit, credit, or prepaid cards? It may seem obvious, but it’s important to confirm upfront a provider supports the type of card you’ll be issuing. A virtual card provider can also help you determine if your desired product best supports your intended use case.
• Can we generate single-use cards? Companies may prefer PANs they can discard after one use if they’re using virtual cards to pay vendors and streamline their payments process. Others issuing virtual gift cards may simply not want PANs to be reusable.
• Can we generate cards for recurring use? If you hope end users will make your card their default payment method, your card product needs a reusable PAN.
• Are these cards reloadable? Reusing a PAN tends to be the norm unless you’re using a single PAN to complete extra-secure business payments or to link transactions to a specific PAN for easier reconciliation. The big overarching concern is whether you expect users to use the card repeatedly.
• What geographies do you cover? If you’re considering international expansion, this is important information to have.
• Which networks do you support? Not every card issuer supports every network for every type of card.
• Can I test cards before signing a contract? Contracting a virtual card provider is a big commitment. If you want to “try before you buy,” see if the provider will allow you to issue a dummy card.
• Which sponsor bank and issuer processor do you use? Knowing the issuing bank will let you know who’s sponsoring your program and their history working with technology companies or startups. And if you’re considering a BaaS provider instead of going straight to an issuer processor, it’s good to know which issuer processor is under their hood.
• What controls are offered for the cards? Some programs offer card controls at the program level. Other providers let you participate in the authorization stream and add more dynamic controls. This is important for use cases where cards should only be used at certain merchants. Limiting geographical use can also help prevent fraud.
• What does your chargeback process look like? An unfortunate reality of running a card program is the “friendly fraud” known as chargebacks, which we dug into deeper with our chargebacks guide. Knowing how your virtual card provider handles chargebacks will help you prepare.

Virtual card program management questions

To find out what it’s like to actually use a provider’s platform, ask about program management. A provider that gives you visibility into key processes and makes it easy to execute core functions will make your job easier in the long run.

Ask your virtual card provider:

• Is it possible to set up payment limits? Payment limits can help protect cardholders from fraudulent spending. For example, if you’re using cards to pay for employee gas, you may want to set tailored limits. If a fraudster gets the card number and attempts a purchase greater than a tank of gas, the transaction will automatically decline.
• Can I manage and create cards programmatically through an API? Not all virtual card providers have developer APIs. A provider with a developer-friendly API will make it easy to run your card program(s) at scale.
• How do I process refunds or cancellations? Unavoidable, refunds happen. It’s better to set up a process proactively if you plan to issue reusable cards directly to end users. Who handles refunds depends on the use case. For example, for bill pay or expense management use cases, refunds would need to happen programmatically on the processor’s end. But legacy providers like the Billing and Settlement Plan (BSP) can make this process challenging. Figure it out early on since unnecessary challenges will frustrate your end users — and your team.
• Can you handle partial refunds? Partial refunds take a bit longer to handle than whole refunds since they require more authorization messages sent across the network. They can also involve multiple vendors within one transaction, such as online travel agencies bundling products from different companies. But partial refunds are straightforward for a well-designed virtual card provider.
• Do you offer dashboards or reports? Seeing everything in one central place makes it easier to run your card program. Reports that detail key data give you insight into which parts of your program work well and which need some improvement.
• Do your virtual card BINs support tokenization? Many companies start with virtual cards then progress to tokenized digital cards to embed in digital wallets. If a provider already uses bank identification numbers (BINs) that support tokenization, you’ll be able to move into digital wallets with less friction.

Card program pricing and terms questions

Understanding a provider’s pricing structure and revenue sharing practices is necessary for choosing the right virtual card provider for you. Request a contract and read the fine print — all of it. This is where you’ll find the “gotchas.” If you don’t understand a key term or requirement, make sure to ask about it.

Questions to ask include:

• Do I need to sign a long-term contract or can I pay as I go? A long-term contract offers stability but locks you into a relationship with your virtual card provider. That's why it's important to find a modern card issuing platform with start-up friendly pricing.
• Will you walk me through your terms of service and other contractual requirements? First, read your contract thoroughly and get your legal counsel to read it, too. But going through the contract with your potential provider can clear up any discrepancies or clarify any unique additions.
• What’s your pricing structure ? A provider may have a mandatory volume minimum. They could even charge per card issued, charge per card batch, or charge transaction fees. Those fees could differ depending on the country where a card is used. Your pricing structure may even change as you scale.
• Do you provide interchange revenue share? In our interchange guide, we explain interchange is a critical source of revenue for fintechs that issue cards. Find out whether your virtual card provider shares that revenue with you, how they divide the revenue, and how revenue sharing varies depending on transaction volume.

Card program implementation questions

The faster you go live with your virtual card program, the faster you start generating revenue so understanding your card provider’s implementation speed is critical.

Assessing a virtual card provider’s implementation process will alert you to any friction in their setup. Ask these questions to get an idea of how they operate:

• What information do I need to provide during implementation? Sharing specific technical, financial, and risk information is necessary for implementing a virtual card provider’s product. Get a sense of what they’d need up front to fast-track the process.
• How fast can my company get to market with your solution? This will cover the length of implementation, but follow up with questions about which factors can prolong the process. Case studies are useful and you can also ask for a referral call with an existing customer.
• What can I expect in terms of implementation support? When you’re new to issuing cards, implementation can seem like a daunting process. Look for a provider that offers adequate support so you can avoid feeling overwhelmed or frustrated.

Choosing a virtual card provider is a big step when it comes to running a successful card program. Make sure you ask all of the questions you need to understand exactly what your virtual card provider offers and how they operate.