American Express Co. AXP is expanding the usage of virtual cards in the United States in its collaboration with Extend, a New York City-based fintech specializing in virtual cards.

Per the pact, U.S. companies with an American Express Business Card can use Extend’s app and create virtual cards, also known as tokens.

Last October, American Express extended the usage of virtual cards in the United States in collaboration with Coupa Pay. The easy acceptance of these cards prompted American Express to expand in the U.S market. Unlike a physical card that can be used over and over again, a virtual card is a unique 16-digit card number, created solely for a single use between a payer and a payee.

The numerous benefits that it provides over physical cards make it an attractive option for easy payment. It can replace outdated and cumbersome paper checks, and the associated manual-process inefficiencies. These cards provide much more security than the physical cards as the 16-digit card number is unique for each payment and is for single use only. Since the card is not physical, it cannot be stolen or re-used. The card also expires once the maximum amount available on it is spent.

The payment space was already shifting to digitization and the outbreak of COVID-19 only accelerated the whole process with e-commerce gaining prominence.

Via the virtual card, American Express will be addressing the easy payment need for businesses that suffered a huge blow from consumer demand drying up on account of the coronavirus outbreak. This left the businesses cash strapped and therefore, instant payment settlement with the help of virtual cards can get the wheels of their businesses moving once again with the operating conditions improving gradually.

Either paying their suppliers or employees, the virtual cards can replace the existing fragmented and manual business payment process of businesses. This can make every transactional step in the business-spend management process smarter and simpler. Also, businesses are eager to adopt these cards and thus, the number of companies making the move to virtual cards for payment processing will only increase in the times to come.

Per a new Juniper Research report, the global value of virtual card transactions will reach $6.8 trillion in 2026, up from $1.9 trillion reported in 2021.

American Express’ partnership with Extend reflects its strategy to fortify its footprint in the B2B payments space to better serve customers and offer the best possible digital payment solutions.

Other players in the virtual card markets are WEX Inc. WEX, Marqeta, Inc. MQ, Mastercard Inc. MA and many others.

American Express carries a Zacks Rank #3 (Hold), currently. The stock has gained 38.5% year to date compared with the industry’s growth of 17.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Image Source: Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Mastercard Incorporated (MA) : Free Stock Analysis Report

American Express Company (AXP) : Free Stock Analysis Report

WEX Inc. (WEX) : Free Stock Analysis Report

Marqeta, Inc. (MQ) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research