An Update on Virtual Cards
Published on June 22, 2025 by Shannon Wray
We know many of you, both Fiscal Hosts and Collective admins, are eager to see virtual cards return to the Open Collective platform. We've been working hard behind the scenes to make this happen, but it’s proven to be more complex than we initially hoped. We’ve learned a lot along the way and want to share an update so you can understand the challenges and why virtual cards aren't back just yet.
What Happened Before?
You might remember using virtual cards on Open Collective, which were provided through Stripe. This was a popular feature that greatly helped Collectives manage their spending. Despite many discussions with Stripe by both our team and Fiscal Hosts, we couldn't find a way forward. Fiscal Hosts could still use virtual cards for their own team's expenses, but not for their Collectives. This led us to search for other solutions.
The Challenges We're Facing
Our search has highlighted several key difficulties:
- Stricter Rules (Compliance): The world of online finance is rapidly changing, with many companies trying to make moving money easier and cheaper. To do this safely and prevent issues like fraud or money laundering, these companies must follow strict financial regulations. These rules are getting tougher, especially for services operating in multiple regions like the US, UK, and EU. Financial service providers (like virtual card issuers) need to be licensed, which means they are very careful about who they work with to ensure everyone is following these important rules.
- Our Unique Setup: The way the Open Collective platform connects Fiscal Hosts, Collectives, and individuals makes finding a virtual card solution tricky:
- The Platform & Fiscal Hosts: We (the platform) provide software for Fiscal Hosts to manage their operation including finances and Collective management (B2B - Business to Business). Fiscal Hosts are independent organizations with their own bank accounts. We can build the technological integration for virtual cards, but the Fiscal Hosts are legally and financially responsible for them.
- Fiscal Hosts & Collectives: From a financial provider's point of view, Collectives aren't separate legal entities. This means issuing cards directly to a Collective is difficult because a Fiscal Host’s business structure is outside of the norm and unfamiliar to most financial providers. (B2U - Business to Unincorporated)
- Fiscal Hosts & People: What virtual card providers do recognize is the relationship between a Fiscal Host and an individual (like a Collective admin) (B2C - Business to Consumer). So, cards need to be issued to specific people. This is akin to credit cards issued by store-chains to customers
This B2B2C relationship (where a Fiscal Host issues cards to individuals who aren't its employees, on behalf of a virtual card provider) is uncommon and can seem risky to card providers.
3. Bank Partnerships: Most virtual card companies work with banks to manage the money and issue the cards. This means each Fiscal Host would likely need to get approval from a partner bank to offer one or more virtual card programs for their Collectives. Setting this up can be a long process and expensive (we estimate $10,000 - $30,000 per Host).
4. Global Coverage is Complicated: We initially hoped to find a provider that worked in both the USA and Europe. However, "working in" a region can mean different things:
- Where is the Fiscal Host based?
- Where do the cardholders live?
- Where will the cards be used (merchants)?
- For example, a US-based card provider might only be able to serve US-based Fiscal Hosts and issue cards to US residents. A Fiscal Host in the US with Collectives in Europe might need two different card solutions and two separate approval processes.
5. Know Your Customer (KYC): Tighter regulations now require that every individual cardholder's identity is verified. This KYC process usually involves uploading ID documents and sometimes a live face scan.
How We're Moving Forward
We see a few potential paths:
- Fiscal Host-Led Solutions: Individual Fiscal Hosts could find card providers that suit their specific needs. They would manage the bank approval process and costs. We would work to help integrate these different providers into our platform.
- Platform-Led Solution (Still Exploring): We're continuing to look for advanced (FinTech) financial technology companies that might offer a platform-wide solution, possibly working directly with major card networks like Visa or MasterCard. These newer solutions often use technology to handle compliance efficiently. However, they can be very expensive (starting around $150,000 per year), and we are too small for some of these providers right now.
- Improving Payouts via Bank Accounts: We already have a feature that connects to bank accounts to track off-platform transactions. We're exploring if this same system could be used to make direct payouts from bank accounts. This isn't a direct replacement for virtual cards, but it could offer another way to manage payments.
Our Next Steps:
- We wanted to share this detailed update so you understand the complexities we're navigating. We'll continue to talk with Fiscal Hosts who are interested in exploring their own virtual card solutions.
- We're also finalizing research on KYC providers. We believe Fiscal Hosts will need these identity verification tools for various compliance reasons, even beyond virtual cards, and plan to start implementing a KYC solution soon.
- We’ll keep an eye on the evolving FinTech landscape for a platform-wide virtual card solution, but this is an open-ended exploration without a set timeline for now.
Thank you for your patience and understanding. We're committed to finding the best ways to support your financial management needs.
The Open Collective Team
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