3 min read

Virtual MasterCard vs P-Cards: What’s the difference?

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Compare and contrast... 

It’s one of the common themes we learn at a young age in school.  It helps us form our arguments and preferences in a cogent and organized manner. Consider all the things people debate in this chaotic and clutter filled world:  Coke vs Pepsi, Yankees vs. Red Sox (this is a major point of division at CloudX unfortunately), Democrat vs Republican, and on and on we go….you get the point.  In today’s segment, we want to look at the real similarities and differences between virtual MasterCards and Purchase Cards because it has broader implications than you would think at the outset of examining the issue.

So let’s begin!


Sure, both of these payment methods are electronic and reliant upon underlying credit card technologies.  They both seek to alleviate the burden associated with check printing and postage that most Accounts Payable departments find themselves mired in. Additionally, both virtual MasterCards and purchase cards typically offer some kind of a fiscal incentive for the spend pumped through them.  Certainly there are some departures here in how those get meted out as some provide cash rebates and others provide points towards airline miles or other items, but in either case the point is you actually get something for your spend.  An addidtional similarity is that both require some kind of merchant fee from the suppliers who are accepting them as a form of payment, and this varies based upon the issuer wit some being higher than others.


Now we get to the good stuff. While P-Cards are certainly a more prolific type of payment solution in today’s corporate landscape, that may not always be the case.  They certainly provide a viable option to relying upon traditional check printing, but not at the expense of simplified processes.  In fact, P-cards require re-training from a process persepective for anyone who is going to be holding one within the organization. This is not a massive deal if you are a small to mid-sized company, but it increases the complexity of deploying such a solution for the larger organizations as the adoption period lags as increased training is required.  Anytime change is involved rest assured you’ll run into delays.  Essentially then P-cards require more change than do virtual MasterCards.

A final consideration is also the on-boarding process that is required to bring vendors into the fold.  For many organizations that are deploying P-cards, the onus of this is placed squarely on the shoulders of the AP and Procurement organizations, tasks that are neither central nor desirable to the day to day functions of good employees in these areas.  In fact, it’s one of the most common drawbacks that we’ve heard from a corporate card roll out standpoint with customers who have gone down this road before! Adoption can be tricky and at times some of these AP folks have felt on their own so to speak once they had the technology at their disposal to be used for payment. 

But Why?

Well, thank you for asking, that was kind of you! Virtual MasterCards empower AP departments to pay digitally while leaving their procurement process as it stands prior to deployment. The primary difference is that the only thing that is getting changed is literally the payment mode, meaning that deployment and adoption to this approach is much more rapid than a broad-scale, organization wide P-card roll out.   This means that the only real change is a back end component that doesn’t act like a boat anchor to your people or process.  Certainly any time a new system is rolled out there will be a learning curve and adjustments that need to be made, but overall the heavy lifting of retraining and reworking internal processes is not a factor because it does not exist. 

Another key point of differentiation comes back to the isolation and security of individual payments when using virtual Mastercards.  At a payment level, each payment has a unique 15 or 16 digit account number that is generated for single use.  This means that audit drill downs into vendor payments is much more localized and precise than running everything through an individual purchase card or fleet of cards.


So to be sure, both of these approaches represent steps in the right direction of getting out from under the pain that is cutting checks, but we believe that electronic accounts payable (as it is coming to be called in recent whitepapers), though it is only adopted presently by about 18% of companies in North America, represents a better option than P-cards for the above reasons.  Less change and broader impact is what companies are after, as it becomes almost an arbitrage play.

Of course, once you’ve got the virtual payments piece of your AP organization, there’s always good old Accounts Payable automation and invoice processing to get busy chasing down, but the endgame of the paperless AP office is more rapidly becoming a reality for intelligent folks willing to put the effort in!

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