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What is a ghost card? - Benefits, challenges, and uses

What is a ghost card? - Benefits, challenges, and uses

The expense management process is a constant back and forth between too much and too little oversight.

Too much oversight and you’re spending too much time combing through transactions and processing approvals.

Sometimes it helps to use a new tool to get things to a healthy compromise. If this sounds familiar, it might be time to start using ghost cards.

What is a ghost card?

A ghost card is a credit card number that’s assigned to either a specific vendor or department. Each ghost card is part of the same credit card account so while the charges are segmented by ghost card, there is a single credit balance that the business has to tend to.

If a ghost card is assigned to a department, anyone on that team can make purchases using that credit card number.

But if a ghost card is assigned to a vendor, the vendor can charge the card directly for any purchases requested by anyone in the business.

Using ghost cards doesn’t mean giving people unlimited purchasing power. You can set controls for ghost cards that limit how much can be spent, by whom, and where.

Ghost cards vs traditional credit cards

Unlike traditional credit cards, ghost cards are digital. What this means is that while a ghost card has its own credit card number and CVV, it doesn’t have a physical copy.

Under one credit account, a business can have many ghost cards. All transactions are run through the same credit account with the balance tended to on the billing cycle.

For traditional credit cards, they are their own account and come with their own statements. Whereas you could have ten ghost cards and one bill, ten credit cards would mean ten bills.

Ghost cards vs virtual credit cards

Ghost cards and virtual credit cards are both types of digital-only credit cards. But a ghost card comes with additional features built for businesses trying to streamline the expense management and procurement process.

Virtual cards don’t offer as much customization and control to restrict spending. They also don’t provide the same level of department-based spending breakdown so there’s extra work to get the same level of insight a ghost card offers.

On a fundamental level, virtual cards are separate credit cards. They’re issued by a financial institution and come with their own separate account.

Businesses can issue ghost cards to teams as they need to. They’re all under one credit account so new cards don’t need to go through an approval process.

Benefits of ghost cards

There’s a wide array of reasons to choose ghost cards. Here are some of the most common reasons businesses use ghost cards in their day-to-day operations.

Improved control over expenses

Some ghost cards come with controls like spending limits, vendor limits, or being usable for a limited time.

By using these controls, you can give teams purchasing power with limits that ensure you don’t go over budget.

For example, say your marketing team is working on a new video ad. If the finance team wants to enable them to cover their costs as they come in, they can issue the team a ghost card for the duration of the shoot with credit limit of the maximum allowable budget.

Through the use of ghost cards, the finance team empowers the marketing team to cover their costs while protecting the business’s bottom line.

Streamlined expense tracking

Since ghost cards can be dedicated to a specific department, you get a segmented view of costs by team without lifting a finger.

By giving each department a ghost card to run expenses through, tracking budgets and spend levels is as simple as checking in on their transaction history. No more sifting through supporting documents or expense reports.

For ghost cards that are assigned to vendors, it’s painless to track total spend with that specific vendor. Or you know exactly where to look to check your latest accounts payable payments to see if you’re up-to-date.

Protection from fraudulent transactions

When you limit a ghost card to a specific vendor, any attempted fraudulent transactions elsewhere automatically get rejected. 

This is especially helpful when working with a new vendor for the first time. By issuing a ghost card for that vendor, your credit card information is safe in the case of a security breach or fraudulent vendor.

Common uses of ghost cards

If you’re thinking of ways to effectively use ghost cards, consider these three pain points they help alleviate.

Recurring payments

When you have recurring payments with a vendor, ghost cards allow you to provide credit card information for them to charge without giving them the parent credit card information. This lets vendors charge you when necessary without sacrificing security.

For ghost cards assigned to teams, their recurring payments are automatically assigned to the team saving you time on upfront paperwork to approve a purchase.

By using ghost cards, you save time and increase security on all recurring payments.

Example: A business has a supplier that they procure their manufacturing materials from. Since they’re topping up on materials regularly, they get a ghost card limited to the vendor so they can provide a credit card number on file without giving out their parent credit card information.

Online purchases

Credit card fraud is the most common type of identity theft in the United States.

With online purchases, you send your credit card information out into the unknown. You don’t know who’s accessing your information, where it’s held, and whether it’s secure.

Using ghost cards for online purchases gives you complete peace of mind. Even if a worst case scenario occurs and your credit card information is exposed, it’ll be a ghost card that isn’t usable at other vendors.

Consider using ghost cards for online purchases so that any information housed on the internet can’t be exploited.

Example: The office administration want to upgrade to standing desks to encourage employee health. They find a potentially “too good to be true” deal online and request a ghost card to make the purchase and minimize their risks.

Travel expenses

Ghost cards can be set up to be limited to certain expense categories. This allows you to cover travel expenses for teams without having to get into the nitty gritty of approving every single transaction for the trip.

As travel expenses start to roll in, you can keep a pulse on how the team is spending and whether they’re staying on budget.

This is especially helpful if a department is sending multiple people to a convention. Set up a ghost card for that team with controls on vendors and they’re covered for the entire trip with a clear transaction history for you to analyze their spending.

Example: The sales team is going to a convention and will be making regular trips back and forth from the hotel to the venue. The team is given access to a ghost card with controls for travel so they can take an Uber when they need to get around.

Ghost card challenges and how to solve them

Implementing ghost cards can help streamline the expense management process, but they aren’t without their potential pitfalls. Look out for these challenges and try our suggested solutions to overcome them.

Writing an effective policy

By using ghost cards, you open up new abilities to control spending. But this doesn’t mean a card will never be misused, deliberately or not.

To cover these situations, you need a ghost card policy that any cardholders need to sign to acknowledge the terms and conditions of use.

Your policy should cover:

  • The purpose of the ghost cards
  • Who is eligible to make purchases
  • Allowable and unallowable expenses
  • Any reporting requirements
  • Consequences for misuse

Drafting up a policy with no prior experience might feel daunting, but there are resources to assist.

Solution: Start with a company credit card policy template. These will cover what you need to consider and you can edit them to fit your specific needs.

Lack of personal accountability

Ghost cards are attached to departments, not individuals.

When reviewing transactions, you won’t see who made the purchases. If someone has taken liberty with the card and done some maverick spending, you won’t be able to immediately identify who’s responsible.

Solution: Require supplemental reporting for purchases on the card. Make it mandatory for departments to submit expense reports that document who approved the purchase.

Limited in-person usage

Because ghost cards don’t have physical copies, you’ll be limited for any transactions that require a physical card. In-person transactions will only be possible if they can take the credit card number down to process the transaction.

This also limits you for purchases that will be picked up in-person and require you to present a credit card as confirmation.

Solution: Have a corporate card that’s usable for in-person transactions. Keep a higher standard of reporting requirements for in-person corporate card usage to monitor for any misuse.

How to implement ghost cards effectively

Getting the maximum value from ghost cards requires some initial legwork to get set up. Focus on nailing these four parts of the process.

Find the right provider

Same with credit cards, ghost cards aren’t a one-size-fits-all type of tool. You should shop around to see what the options are.

When comparing options, consider the following features:

  • Integrations: Will it easily integrate with your accounting software to import transaction information?
  • Controls: Does it allow you to open up or restrict usage in a way that reflects your goals?
  • Reporting: Does it provide you with supplementary reports in a way that’s intuitive and useful?
  • Credit limit: Will it allow you to spend as you need to in a billing period?
  • Fees: Will there be account or transaction fees that make the card costly?
  • Ease of generating a new card: How quick and easy will it be to go from wanting a new card to having a usable one?

Set up constructive spending controls

Spend time exploring the controls available to you and how they can restrict a card to its intended usage.

Define what approved and unapproved usage of the card looks like. Once you have these defined, you can look for the control settings that match up with your criteria for approved activity.

Since controls can be set for each ghost card, you can customize the ghost card experience for each department or vendor.

You’ll likely have to adjust the controls over time through some trial and error. Because of this, it’s worthwhile to decide whether over-restricted or under-restricted is the preferred outcome. Then you’ll know whether to go too hard or too light on the controls to start.

Integrate with your accounting software

Ghost cards streamline expense management, but you’ll find even more efficiency if you integrate your ghost card with your accounting software.

By seamlessly passing transactions on to your software of choice, you skip time-consuming reconciliations and get access to real-time data.

This is invaluable when you introduce ghost cards for the first time. By analyzing the transaction history in real-time, you can see if your controls are working effectively or whether they need an adjustment.

Train employees and cardholders

While controls will restrict card usage, there’s still the potential for misuse by a cardholder. Maybe that business meals budget for team lunches is getting misused for off-hours, late night deliveries.

To avoid misuse, train any employees or cardholders on your credit card policy. Beyond training sessions, keep the policy in an accessible place for employees to reference back to at their own convenience.

It’s also best practice to get each cardholder to sign an acknowledgment of the policy that states they understand the rules.

The policy needs to clearly state the consequences of misuse so if there are any infractions, the user is aware of the ramifications.

Streamline expense management and increase visibility

Making a switch to your payment methods can have a massive impact on your workflows and the way you understand your spending.

With BILL Spend & Expense, you can set up your team with virtual cards that have a robust set of controls and reporting that keep spending in check and understandable at a glance. With credit limits of up to $5 million, you’re covered for how much you need when you need it.

Our cards are tailor made for saving businesses time and money on their procurement processes. See for yourself with a demo.

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