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Virtual Credit Cards or Physical Cards: benefits and differences

Virtual Credit Cards or Physical Cards: benefits and differences

Published: 24 February 2022 • Reading time: 4 minutes

Credit and debit cards are one of the most popular payment methods nowadays, especially in Europe and the UK. In July 2021, almost 1.9 billion payments by debit and credit card were estimated in the UK, almost doubling from the same month of 2014 – when the figure reached 1 billion.¹ This growth is also evident from another research carried out in 2021, which showed that when asked how people had conducted payments in the previous 12 months, 67% answered with debit card and 44% credit card. Alternative payments like PayPal and e-wallets were also among the most common answers with a 64% of online payment replies.² However, although alternative payments are becoming more popular, debit and credit cards still remain amongst the most used payment methods. Now, although when we think of credit and debit cards our mind automatically goes to physical ones, virtual cards are now on the rise.

But, how do they work and are they safer than their physical counterparts?

Virtual vs digital cards

Firstly, there is a difference between virtual and digital cards. Digital cards are virtual versions of physical cards that are stored in e-wallets and can be used for contactless payments. The sensitive information of your card – card number, expiration date, CVC number – are the same for both the physical and digital copy of the card. They are useful since they allow more freedom to pay in store without the need for the physical copy but simply with your device.

On the other hand, virtual cards do not have a physical copy. They are temporary credit cards that are virtually issued by banks or providers and come with their own 16-digit number and validation data. What is peculiar is that they are usually active for a specific and pre-determined amount of time and a spending limit can be easily set from the beginning. The expiration date – which can vary from provider to provider – and the limited budget make these cards extremely useful when the access to a bank account or card needs to be restricted due to specific circumstances.

The main use cases are:

  • Business
    They are the perfect tool for company expenses, since they reduce the risk that come from passing around sensitive card information for payments. Moreover, by having the option to set a spending limit, there is control over finances.
  • Personal
    Virtual cards are useful for subscription payments, since you can easily set them up with a specific spending limit with your preferred recurrence (for example monthly or quarterly). This allows you to keep your sensitive card information private and still sign up to products or services. Another situation in which virtual cards are extremely useful is when card data is needed to be shared with someone else, which is never completely secure. By sharing your virtual card with a limited budget, your account and original credit card is safe and protected in case of fraud.

Benefits of virtual cards

Virtual cards have benefits both for your Ecommerce and for your customers. Let’s look at the main ones:

  • No need for physical cards
    You can simply forget your wallet at home and use your virtual cards for payments through your phone. In fact, your card can be safely stored in your e-wallet without need for the physical counterpart.
  • Safety
    You have complete access and control over your virtual card and can lock and block it from your phone in any moment, if needed. Moreover, by not sharing your sensitive account information or original sensitive credit and debit card data, your finances are protected.
  • Easy to activate
    It is simple and quick to activate a new virtual card on you provider on your phone, without the need to wait to receive the physical card at your home.
  • Low fees and costs
    Most virtual card issuers do not charge you any additional fees for the service and allow you to take advantage of a new asset without the need for a new account.
  • Easily manage your finances digitally
    By activating new virtual cards for your different subscriptions and needs, you can easily have control over your finances.

In conclusion, virtual cards are now becoming increasingly popular and are a great solution for secure payments. As seen above they become especially useful in corporate environments where company cards are usually needed by a number of people and for personal use as a safe tool to keep your sensitive card data private and to prevent fraud. In fact, although over the decades the solutions to protect buyers and sellers from fraud have multiplied and evolved, today Ecommerce is still not free from risks. You can find out more about fraud prevention and how to keep your Ecommerce safe in our whitepaper on the topic.

Source
1

UK Finance, 2021

2

How have you conducted payments online in the past 12 months? Statista.

TagPayment methodsDigital payments

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