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India's rapidly evolving financial landscape in 2022 is throwing strong headwinds at all businesses that require disbursing payments to remote gig workers/contractors or agencies.

You must have heard about the recently updated Reserve Bank of India guidelines around auto-debits from debit and credit cards. According to the new mandate, customers must provide an e-mandate as an additional factor of authentication (AFA).

This additional step means that card-issuing banks are now required to send a pre-debit message to alert their customers 24 hours before the payment is due. The cardholders consequently need to approve transactions that exceed ₹15,000 via a one-time password for a successful auto-debit payment.

The new auto-debit guidelines issued by the Reserve Bank of India apply to domestic and international recurring transactions. However, expanding the scope to national and international means that the auto-debit mandate set up on any credit or debit card, either domestic or international, will not be processed without the additional factor of authentication (AFA).

You must be wondering if there are solutions that will help you make timely payments and avoid eroding trust and business growth. Virtual prepaid cards could be a great alternative. So let’s learn more about them.

How Businesses can use Virtual Prepaid Cards to Solve Recurring International Payments

The future doesn’t involve waiting for the dreaded authorization “reminder.” Swap the de facto options with virtual prepaid cards!

What Are Virtual Prepaid Cards?

Virtual prepaid cards are an amalgamation of virtual cards and prepaid cards. So let’s break it down one concept at a time to get a holistic view of how they function.

  • Virtual Card

A virtual card is simply an online version of a plastic bank card. They work in the same fashion as regular plastic cards for online transactions. The pertinent details that distinguish a specific card, such as the 16-digit number, expiry date, and CVV number, are accessible by logging into your account online. Although linked to your business’s card account, these virtual numbers cannot be traced back.

  • Prepaid Card

Prepaid cards are loaded with a certain sum of money, and there is no connection with your business’s banking account. Your expense management department decides how much “cash” is allocated to the card, and this limit cannot be breached.

  • Virtual Prepaid Card

These are an amalgamation of the previous two card types. Virtual prepaid cards scale your security to the maximum. You can top up each virtual prepaid card with an allocated budget. Since this card has the benefits of a virtual card, there’s no physical theft, and the card cannot be traced back to the bank account. Furthermore, virtual prepaid cards do not allow unauthorized access to spending funds more than the established rules.

(Xoxoday virtual prepaid card allows you to send virtual cash from VISA® and Mastercard® from India to abroad—across multiple countries. Simply go to Reward Catalog, select cash & prepaid cards, and add the virtual cash into the cart.)

Benefits of Using Virtual Prepaid Cards

A caveat from the Reserve Bank of India guidelines is that additional factor authentication is required for recurring transactions, not for 'once-only' payments. Also, the standing instructions must be for payment from your debit/credit card. This distinction makes using virtual prepaid cards a great alternative!

Virtual prepaid cards make the process of recurring payments effortless. They eliminate the hassles of OTP-based authorization, auto-debit failures, overdraft fees, and approval delays while paying your gig workers and contractors or maintaining subscription access to crucial business tools.

Let’s learn more about these perks:

1. Instant 24x7 Payments

Virtual prepaid cards allow round-the-clock and uninterrupted payment facilities. You do not have to worry about holidays or delays in the communications/payment networks. Carry on business, as per usual!

2. Easy to Use

A huge benefit of making payments using virtual prepaid cards is that you don’t have to go through the formal payment request and approval process. Virtual prepaid cards can be created quickly and used straight away. Being present virtually eliminates the need to worry about production and delivery costs.

3. Accepted Across Geographies

Are you frustrated about carrying out cross-border payments? Stress no more! Virtual prepaid cards allow you to carry out payments across international boundaries without hassles.

4. Zero Fraud Liability

Virtual prepaid cards aren’t physical items, so they dramatically reduce the chances of cloning and different types of payment fraud. Additionally, hackers can’t trace the details back to the original account. You also get the benefit of remotely freezing the card in real time.

A Quick Recap

In this article, we shared the inherent benefits of using virtual prepaid cards to manage business spending in light of the updated Reserve Bank of India auto-debit guidelines. The new guidelines lead to a painful authentication process and chances of auto-debit failures. Virtual prepaid cards can act as pain relievers here. Virtual prepaid cards address all of these pain points and more. These can be created quickly and used immediately; help to avoid fraud and embezzlement, and allow round-the-clock and uninterrupted payments.

How can Xoxoday help you with Virtual Prepaid Cards?

Xoxoday lets you instantly issue virtual prepaid cards from popular networks like Visa® and Mastercard® to your payroll department, anytime and anywhere, to help your company make timely payments and remain a dependable business partner in these times of constant change.

What’s more, using Xoxoday’s virtual prepaid cards, you unlock savings on processing fees and manual costs while getting the benefits of minimal processing and integration fees. These features allow you to avoid hassles like OTP-based authorizations and approval delays and continue uninterrupted payments to your business partners.

Ready for your first virtual prepaid card? Request a demo with Xoxoday Plum!

Mohit Bansal

Mohit Bansal

Mohit Bansal has 6 years of experience in solving early product and product marketing problems. In his last stint, he along with his co-founders bootstrapped a profitable startup.