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What are single-use credit cards?

What are single-use credit cards?

Every time you make a purchase with a credit card, you’re giving somebody precious information. With your credit card number, expiry date, and CVV number, anyone can “take” your card and start making unauthorized purchases.

Even if you trust the person on the receiving end, cyberattacks have been on the rise increasing the risk of your information being exposed.

There are changes both big and small you can make that help keep your business safe and secure. One possible change is starting to use single-use cards. 

What are single-use credit cards?

Single-use credit cards (also called virtual cards) are “alternate” credit card accounts that are tied to your existing credit card account. These alternate or “alias” credit card accounts keep your real account information safe.

How it works is, after you are approved for a credit account, you can request a single-use credit card at any time. These single-use credit cards can be generated for a one-time transaction, be limited for use at a single vendor, have spend limits, or be active for a limited period of time.

While vendors charge your single-use card, all transactions are run through your credit account. You still tend to the credit card’s balance as you would a traditional credit card.

For example, if you use three different single-use credit cards for the purchase of office supplies, paying down a supplier’s invoices, and paying a cell phone bill, all three vendors will have different credit card information, but it will be the same account being billed.

Single-use vs traditional credit cards

With traditional credit cards, you have a single credit card (often physical) which has the necessary information needed for a vendor to charge a transaction to that account.

However, by providing the vendor with this information, you’re vulnerable in the case of a security breach or a deceptive vendor looking to take advantage of its customers. This leaves you exposed to unauthorized charges or fraudulent transactions.

A single-use credit card is a solely digital card with alternate credit account information that acts like a middleman for your transactions. Any purchases are charged to the single-use credit card before the charges are passed on to the parent account.
As a result, if your card information is compromised, your account is protected.

Benefits of single-use credit cards

From increased security to smoother accounting processes, implementing single-use credit cards can improve multiple aspects of your business’s financial processes.

Security against fraud

By using alternate credit card numbers, your true credit card information is kept safe. 

If needed, you can easily cancel a single-use card without canceling the credit account. This allows you to keep your account running without worrying about a hit to your credit score and starting from scratch.

Some credit providers will let you set the credit limit or available amount for each single-use credit card. By setting a low credit limit, you minimize how much damage can be done before the card starts rejecting transactions.

Minimize overspending

The same controls single-use cards offer to protect you against fraud can be used to protect your business from overspending.

Credit and spending limits can be used to ensure only an approved amount can be spent. 

For example, if you’ve approved a business meal for the partnership team, you can set a limit that ensures they don’t go over budget trying to make a deal.

It’s also possible to set an expiration date on a single-use card. This makes it an excellent tool for avoiding the unwanted renewal of subscriptions so they don’t go on for longer than needed.

Ease of transaction tracking

Cut down on time spent reconciling or auditing credit card transaction history with single-use cards for different purchases.

By having a single-use card for a specific purchase, like paying for your software subscriptions or topping up on office supplies, you know what the transaction history entails because you set the controls.

Think of it this way: instead of doing a large amount of work after the purchase to find out what it was and whether it was approved, you’re doing a small amount of work upfront to keep your financial information secure and your transaction history consistent.

Streamlined expense management

For managing a team’s spend, single-use credit cards give employees autonomy without giving them the keys to the business’s cash reserves.

This is especially helpful for managing subscriptions or recurring expenses without going over budget.

As an example, if the marketing team is experimenting with digital ads and you don’t want them to go over $1,000, simply issue a single-use card with that limit. This empowers the team to do their work, but ensures they’re sticking to the budget that was set out for them.

With single-use credit cards, you get the ability to streamline the procurement process while giving you peace of mind that there won’t be a misspent dollar on your income statement.

Common uses of single-use credit cards

The benefits of single-use credit cards make them a worthwhile consideration for any business. But if you’re looking for specific use cases, these are some of the most common examples.

Online purchases

Making purchases online requires you to be very trusting. You have to trust the vendor who is processing the payment, but you also need to trust where your information is stored.

The United States experienced an all-time high of 3,205 data compromises in 2023, with roughly 353 million Americans being affected.

If your credit card information is exposed in a security breach, you often won’t know until the fraudulent transactions start rolling in.

But if your single-use credit card information is exposed, it’ll likely be outdated and nullified by the time the fraudsters try to use it.

Travel expenses

The worst nightmare of giving an employee a credit card for their upcoming business trip is finding out they lost it somewhere. All of a sudden, you’re digging through transactions trying to find out when it happened and what should be reported.

With single-use credit cards, there’s no physical card to lose. And if that credit card information is picked up anywhere, it can’t be used for any purchases you wouldn’t authorize.

Pair that with generating single-use cards for specific expense types, maybe one for Uber and another for the hotel they’re staying at, and you can securely cover an employee’s needs while segmenting expenses for ease of reconciliation.

Managing subscriptions

Since single-use credit cards can be restricted to a single vendor, they’re often provided to teams to pay for recurring subscriptions.

This gives the employee or team the ability to pay for the subscription without giving them the company credit card or credit information that could potentially get misused.

If you only want to authorize the subscription for a period of time, set an expiry date so the subscription can’t be renewed without someone on the finance team giving them the go-ahead. 

This is especially useful if you’re given a notice of increased prices that you want to avoid paying.

Single-use credit card challenges

Before committing to single-use credit cards, there are some challenges to consider. Look out for these possible pain points if you’re going to get started with single-use credit cards.

Can’t be used in-person

If any part of the purchasing process involves being in-store or having to verify credit card information, a single-use card may not be an option.

For example, if you’ve purchased something online and need to present the credit card when you pick it up, you won’t have the same credit card information used for the purchase. The store might not let you complete the pick up.

Additionally, since you don’t have a physical credit card, you can’t present it when going through a checkout process (although some—like ours—can be saved to your digital wallet and used on a mobile device).

Account numbers expire

Some single-use credit cards generate new information for each transaction, meaning they aren’t suitable for repeat billing. 

If you want to provide your vendor with credit card information so they can process payments, a single-use credit card might be restricted to a single use before it expires and needs to be replaced.

This means any recurring payments will need to be processed manually or updated as soon as the recurring payment is processed.

Be mindful of this when you’re using single-use credit cards so you aren’t having payments bounce because the credit card information is no longer valid.

System downtimes

If you’re hoping to run every transaction through a single-use credit card, you may experience disruptions.

The provider needs to have their system up and ready to generate single-use credit cards if you need a new one.

While this isn’t a frequent occurrence, it can be an inconvenient roadblock if it happens. You may find yourself needing to reach for the company card and miss out on the benefits of a single-use card in those off chances.

Integrating single-use credit cards with your financial systems

At first glance, having single-use credit cards for your purchases multiplies the work you need to do collecting statements and reconciling transactions.

However, single-use credit cards are a single credit account that can still integrate with common accounting software. Much like you can connect traditional credit cards to accounting platforms by API, so too can single-use credit cards (depending on the provider).

For example, our virtual cards automatically connect with our Spend & Expense platform that integrates with QuickBooks, Oracle NetSuite, Sage Intacct, and more.

Ultimately, whether a provider can integrate with your accounting platform of choice should be a deciding factor in who you choose. 

Not only does a seamless integration cut down on your workload, it also helps you make real-time assessments of the business’s spending. This lets you manage and track your pacing on budgets so you’re not just monitoring spending, you’re mastering it.

Single-use cards with multiple impacts

Trusted by companies like Noom, BILL Spend & Expense and single-use credit cards are a powerful tandem for managing spend, minimizing risk, and expediting the expense approval process.

With functionality tailormade to give finance teams more control with less work, our single-use credit cards will be the ultimate tool to keep your spending in check and secure.

Save time and money with automated spend & expenses with BILL and try our single-use credit cards to facilitate your payments.

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