Citi entered the partnership with MasterCard to launch a virtual card product - Citi Virtual Card Accounts - for its treasury clients. Citi Virtual Card Accounts is created to provide institutions with a secure means for making and controlling purchases. The unique "virtual" card numbers for transactions generated by new service allow administrators to exercise dynamical control on each virtual card account.
Everything is done in real time, according to Paul Simpson, Citi's global head of treasury and trade solutions. This is possible because businesses are enacting the spending controls before a transaction is made, versus after-the-fact, as is the case with physical purchasing cards.
But the most distinctive feature of Citi Virtual Card Accounts is its global, multicurrency capabilities. The cards can be issued in 48 countries being an extension product for Citi. Both the analysts agree that for multinational companies the ability to make purchases in local currency in nearly 50 countries instead of using USD transactions is very useful.
MasterCard will be running in part on the card company's inControl platform, technology gained through its acquisition of Orbiscom this January. inControl is powering the virtual card number and controls but it is integrated with Citi's MIS tools. Working with Visa as well, Citi has chosen MasterCard for the virtual card product anyway because of its ability “to do this quickly and globally”, according to Simpson.
The system is Web-based and operates via the same front end Citi uses for its card business. Clients generate a unique virtual card number and assign custom reference data for each transaction to facilitate the reconciliation process.
The release of Citi Virtual Card Accounts says that this is a secure, electronic solution for post-invoice payments and "card-not-present transactions" made via the Internet, phone or mail order.
Nancy Atkinson, a senior analyst at Aite Group, affirms: “Virtual cards are the future for commercial 'cards'. Their flexibility and controls for corporate procurement managers make them extremely appealing in helping to enforce consistent procurement policies. Again, multinational companies will find this offering convenient, secure and a great assist in managing companywide spend."
Another benefit of virtual cards is that they are definitely a liability of the company, but with the advanced controls to prevent fraudulent use. Virtual cards open more capabilities to capture corporate spend compared with P-cards.
"Virtual Card Accounts will be one of our most prominent new products and should grow significantly over the next three to five years," says Simpson. "A key for our clients is the real-time ability to control and deploy this globally and consistently. This is what we've heard from them as something that can be a differentiator for Citi."