The virtual card issuer decision most travel businesses get wrong
Virtual cards are now standard equipment in travel. For most OTAs, tour operators, and bed banks, virtual cards sit at the centre of supplier payments: flights, hotels, transfers, and ground services, all processed at scale, across borders, and around the clock. The choice of which issuer to work with is often treated as an operational detail rather than a strategic decision and is frequently led by one factor: the rebate level.
That framing is too narrow. This guide walks through what differentiates one virtual card issuer from another, and where those differences show up in your margins, your treasury, and your operations.
Why your issuer affects performance, cash flow, and risk more than you’d expect
On the surface, most virtual card programmes look similar. They're Visa or Mastercard branded, they support single-use or multi-use configurations, and they offer some level of reporting and interchange. The differences are structural, and they appear when you look closely.
Issuers vary in how they hold and move funds, how they connect to card schemes, how many currencies they support, and how well their infrastructure fits into treasury and back-office workflows. Those structural differences affect working capital, FX cost, decline rates, reconciliation effort, and fraud exposure. Over time, at volume, the small differences compound.
The question worth asking is: is your virtual card setup helping you improve margin, reduce risk, and simplify operations, or are you managing around its limitations?
Why do some virtual cards get declined?
Of all the factors that separate one issuer from another, card acceptance is typically the most immediately felt. When cards start declining at low-cost carriers or hotel operators, the impact is fast and visible: operations teams intervene, itineraries are reworked, and customers can drop out of the booking flow. Each declined card has a cost, some visible, some not, and that makes it a useful starting point for any issuer review.
Acceptance is influenced by interchange level, card product configuration, Bank Identification Number (BIN) range, and currency alignment between the card and the supplier's acquiring currency. Some issuers operate within a narrow card portfolio, which limits your options when acceptance starts to slip. Others offer a broader range across multiple interchange levels, schemes, and card product types, giving you more to work with.
The issuer can't manage your acceptance performance for you, but they can give you the range of cards you need to manage it yourself. A narrow portfolio means limited room to manoeuvre. A broad one means that when decline rates shift, you have options. That breadth is what to look for when evaluating an issuer.
When reviewing an issuer, ask how broad their card portfolio is, whether they actively monitor acceptance performance across travel-specific portfolios, and how they respond when decline rates shift. Acceptance performance should be measured and managed, not assumed. The right issuer makes it easier to do both.
The funding model that’s quietly costing you cash
Travel businesses have historically favoured prepaid virtual cards for a good reason: they limit fraud exposure. When a card is loaded with a specific amount for a specific payment, suppliers can't charge additional amounts after settlement.
The problems emerge at scale. Pre-funding cards in advance locks up cash that can't be deployed elsewhere or reported on your balance sheet. And if a card isn't funded accurately, the payment gets declined, even when the money exists. After settlement, any residual balances left on cards have to be manually swept to recover those funds. Across thousands of bookings, the drag on liquidity, acceptance rates, and operations adds up quickly.
Account-based authorisation removes these problems at source. Instead of authorising against the balance on an individual card, the transaction is authorised against the cleared balance in a linked account. There's no pre-funding, no residual balances, and no manual sweeping. Your funds stay pooled and accessible, ready to move when a transaction is authorised. Some issuers take this further with just-in-time funding, where the card is funded at the exact moment a payment is needed, for the exact amount required. Nothing sits idle, and nothing needs recovering afterwards.
The catch is that not all issuers can offer both an account and a virtual card within the same structure. Where a third party is needed to bridge the two, it adds complexity and introduces operational risk. An issuer that can provide both removes that dependency and makes the prepaid model unnecessary.
Understanding which model your current issuer operates on, and what that model costs in working capital terms, is a useful starting point.
What happens when your bank and your issuer don’t talk to each other?
It's also worth understanding how your issuer is structured behind the scenes. Some issuers are principal members of Visa and Mastercard and hold their own regulatory licences as electronic money institutions (EMIs). Others rely on third-party banks in the fund flow. The bank holds the funds, and the issuer's ledger must stay synchronised with the bank's records for cards to authorise correctly.
When those systems fall out of sync during a bank holiday, a weekend, or a peak booking period, cards can fail even when a finance team has already transferred the funds. The booking is lost, the supplier relationship is strained, and the operations team is left to resolve it manually. If it happens over a weekend or bank holiday, resolution typically waits until the working week resumes.
Fewer layers between your account and the card scheme generally means fewer points of failure, faster settlement, and greater resilience. This isn't always visible in a commercial conversation, but it's relevant when thinking about long-term scalability and reliability.
Getting funds where they need to be, exactly when they’re needed
Booking volumes don't pause on a Friday evening, and neither should your ability to fund your payment account. If your issuer can't receive and process inbound payments continuously, finance teams often overfund accounts before the weekend as a precaution. That approach works, but it ties up capital unnecessarily and introduces a planning overhead that compounds during peak periods.
The relevant question is whether your issuer is directly connected to real-time payment schemes, for example, Single Euro Payments Area (SEPA) Instant in Europe and Faster Payments in the UK. Check too whether account balances update continuously, including at weekends and outside standard hours. The ability to fund in seconds at any point changes how treasury teams manage liquidity and reduces the need for precautionary buffers.
FX capability is a related factor in how quickly funds can reach the right currency. Where an issuer holds native FX capability, funds can be converted into the required currency at the point of receipt, without relying on cross-border SWIFT transfers, which can introduce delays of one to several business days. For businesses moving significant volumes across multiple currencies, the distinction between in-house FX and a SWIFT dependency can have a material effect on how quickly funds are available and where working capital sits at any given moment.
Multi-currency support affects more than just conversion costs
Travel payments are inherently cross-border. Currency alignment between the card and the supplier's acquiring currency influences both acceptance rates and FX cost. If a card is issued in a currency that doesn't match the supplier's preferred settlement currency, the transaction may face a conversion, and that conversion carries a cost.
Some issuers operate in a limited number of currencies, which can introduce unnecessary conversions at scale. Others support broader multi-currency issuing, allowing cards to be matched more precisely to the supplier's local currency and reducing the accumulated FX cost across a high-volume portfolio.
When reviewing an issuer, check how many currencies they support, whether local currency card issuance is available, and how FX is priced. The numbers can look small per transaction and significant in aggregate.
How your issuer connects to your systems
Most issuers now offer an application programming interface (API). That's no longer the differentiator. The question worth asking is whether the API was built with travel in mind, or whether it's a generic payments API you'd need to adapt to your booking workflows.
There is also a structural question worth understanding before evaluating API features: whether the API was built from the ground up as the primary interface or added onto existing infrastructure as a later layer. Issuers built API-first have a fundamentally different architecture: every function, from card creation to account management to reporting, was designed to be accessible programmatically from the start. In practice, that difference shows up in reliability, feature depth, and how well the API handles the volume and complexity of travel payment workflows.
Legacy APIs are common in this space. They may support basic card creation and transaction reporting, but they weren't designed for the volume, metadata requirements, and supplier-specific configurations that travel businesses need. Practical limitations show up when you try to create cards in bulk, attach booking references and supplier details at the point of issuance, manage multiple currencies across a single portfolio, or get reconciliation data into your finance systems without manual intervention.
A travel-tailored API handles these natively. It lets you create and manage cards at the level of individual bookings, pass supplier and booking metadata at issuance, and receive real-time webhook notifications when payments are processed. Reconciliation data flows directly into your back-office platforms rather than requiring file uploads or manual matching.
Also worth considering is whether the issuer supports direct integrations with travel platform channel managers. If your issuer is already connected to the platforms you use, implementation is faster and ongoing management is simpler.
Keeping control of what gets charged
Virtual cards are generally more secure than static corporate cards or manual bank transfers, but the level of control available varies considerably. Single-use configuration, authorisation windows, merchant category restrictions, and real-time cancellation capabilities all reduce exposure. Multi-use cards held centrally or shared across teams can introduce risk if they're not carefully structured.
Review how configurable the card controls are, what visibility exists at transaction level, and how quickly cards can be adjusted or cancelled if an issue arises. Fraud management should be designed into the programme structure, not bolted on after problems occur.
What good actually looks like with virtual cards
A well-structured virtual card programme combines strong acceptance performance across the supplier types relevant to your business, flexible interchange configuration, account-based authorisation, real-time funding via direct scheme connectivity, broad multi-currency issuing, a travel-tailored API, and configurable fraud controls. It also fits into existing workflows rather than requiring you to adapt around it.
Not every business needs the same configuration. The right setup depends on volume, supplier mix, currencies, and operating model. But understanding the structural differences allows you to make an informed choice rather than inheriting a default arrangement.
Most travel businesses don’t change their virtual card issuer because switching feels complex. That’s understandable. But it means the default arrangement persists long after the structural problems become visible: the working capital sitting idle over a long weekend, the decline rate that operations teams have absorbed as normal, the reconciliation overhead that’s grown quietly alongside the business. These are slow costs. They don’t trigger action the way a single large failure does. Understanding your issuer’s architecture is the first step to knowing whether those costs are structural or optional.
Ready to evaluate your current issuer setup? Explore Modulr for travel.
This article is for informational purposes only and should not be construed as financial, legal, or regulatory advice.
TL;DR
Choosing the right virtual card issuer affects more than rebate. Your issuer’s funding model determines how much working capital is tied up and how often cards decline for funding reasons. Their scheme connectivity determines whether your payments work on bank holidays and at weekends. Their card portfolio determines your ability to manage acceptance when decline rates shift. Their API determines how much of your operation you can automate. Evaluating those factors systematically, rather than defaulting to rebate as the lead variable, is the difference between a virtual card programme that runs cleanly and one you work around.
FAQs
What is a virtual card?
A virtual card is a digitally issued card number (without a physical card) used to make payments to specific suppliers. In travel, virtual cards are typically issued per booking, giving businesses control over spend, simplifying reconciliation, and reducing fraud risk.
What is the difference between a prepaid virtual card and account-based authorisation?
A prepaid virtual card requires funds to be loaded in advance, locking up working capital. Account-based authorisation allows cards to be authorised against a single account balance, eliminating the need to pre-fund individual cards and improving cash flow at scale.
Why do some virtual cards get declined by travel suppliers?
Acceptance is influenced by interchange level, BIN routing, and card product configuration. Low-cost carriers and some airlines block card types with higher interchange rates. An issuer with a broader card portfolio and the ability to configure BINs by supplier type can materially improve acceptance performance.
How should a travel business evaluate a virtual card issuer?
Evaluate on acceptance performance, funding model, third-party bank dependency, real-time funding capability, API flexibility, fraud controls, reporting depth, and commercial structure. Key questions include: how broad is the card portfolio, does the issuer hold its own EMI licence, is account-based authorisation available, and is the API built for travel workflows or adapted from a generic payments product.
How do virtual cards improve reconciliation for travel businesses?
Each virtual card carries a unique reference that maps directly to a booking, eliminating the manual matching required with shared corporate cards or bank transfers. In a well-configured setup, reconciliation data flows automatically into your finance system, reducing end-of-month workload and error rate.
