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How SMEs can achieve better security and control with virtual cards
March 29, 2022

By Chris Whyte, Chief Risk Officer at Caary.

Innovation often moves faster than public trust, but that gap is closing for digital payments, including virtual credit cards.

I’ve specialized in finance and risk throughout my career, and I remember a time when Canadians were very wary of digital payments and still relied heavily on cheques. Fortunately, Canadians and Canadian businesses are increasingly recognizing that digital payments offer unparalleled security and control, and we are seeing that play out in the significant decline of cheque use.

In its latest Canadian Payment Methods and Trends report, Payments Canada reports another significant drop in cheque volume in 2020 – down 26 per cent from 2019. Another 2021 Payments Canada report found that “overall, businesses perceive electronic payments to be more secure than paper and card payment methods.” This includes around half of businesses who consider e-commerce and mobile payments to be secure methods to make payments.

I’m thrilled that Canadians’ trust in digital payments is growing. This means that more Canadian businesses will adopt and benefit from digital payments, which is especially key for small to medium-sized businesses (SMEs) who are rebuilding from the COVID-19 pandemic.

With this change in preference and behaviour, I am hoping SMEs are beginning to explore the merits of virtual credit cards.

A virtual credit card is just like a plastic credit card except that it exists digitally rather than physically. It has a unique 16-digit card number linked to your account, but instead of sitting in your wallet, a virtual card lives on your computer or phone behind a secure login, so it can’t be physically lost or stolen.

As any small business owner knows, flexibility is key. Unlike a plastic credit card that arrives by mail with a set spending limit and expiry date, virtual cards can be used within seconds of being issued, and they can be tailored to the daily needs of your business and employees. Depending on the provider, you can issue and cancel as many virtual cards as you like, and you can set the spend limit and expiry date.

A great example is an employee taking a business trip. You can easily issue a virtual card for a set period of days with a set spending limit, which makes accounting for that trip extremely simple.

Virtual cards also support spend management by offering better visibility into your expenses. By assigning virtual cards to specific suppliers, subscriptions or teams, business owners can easily identify where they’re spending money and budget accordingly.

But it’s not just about efficiency, virtual cards lead on the security front too. 

Payments Canada reports that around 1 in 5 Canadian businesses experience payment fraud, with credit card payment fraud as one of the two most common types. Of the businesses that experienced payment fraud, 18 per cent had an unauthorized purchase made on their card, and 17 per cent noticed a transaction on their statement that they did not make.

As Chief Risk Officer at a fintech, these are worrying statistics – and I’m sure many SME owners agree. One way to mitigate risk is with virtual cards, which are well positioned to provide better security for online spend and prevent supplier fraud. Here are a few examples:

  1. One of your suppliers is hacked

Data breaches happen. When you use a unique virtual card for each supplier, your exposure is limited to a single card number instead of your whole account. On the Caary platform, for example, card members can lock or cancel an individual card to keep their account safe.

  1. You can’t get out of that subscription

Subscriptions can derail your spending if cancelling is a hassle or you start incurring surprise charges. By issuing a unique virtual card for each pre-authorized payment and setting a monthly spend limit, you can ensure you’re never overcharged and cancel at your convenience.

  1. You’re concerned about the security of an online purchase

Worried about a major purchase with a new supplier? Issue a single-use virtual card with a supplier restriction and spending limit, which you can revise at any time. In short, Canadians’ growing trust in digital payments is well-earned. Innovations such as virtual credit cards will help SMEs secure their accounts and better control spend in the aftermath of the COVID-19 pandemic. And as digital payments become increasingly accepted, I’m excited to see what fintech comes up with next.


Chris Whyte

Chief Risk Officer at Caary

Chris is a senior executive specializing in finance and risk, fintech, digital transformation and credit risk management. In addition to his consulting and advisory experience, Chris has spent over 30 years leading change and innovation as a senior executive including: Chief Operating Officer at Home Trust; Senior Vice President Lending Technology at D+H (now Finastra); Vice President and Head, Alternate Channels at CIBC; and Vice President Personal Lending at CIBC.