To put things in perspective, according to Wex Inc. in March 2019, online and digital research company Juniper Research “predicted that virtual cards would experience a 90% increase in the next several years and surpass $1 trillion by 2022. Now, due to the wide-ranging effects of COVID-19, it’s likely the percentage increase will be even higher than 90% and that we will reach that $1 trillion mark sooner than 2022.”
What is a virtual card?
Simply put, these cards are not physical or plastic cards per se. Rather, they are randomly-generated credit card credentials that are delivered for payment on behalf of your static credit card data.
Such credentials are typically generated using the process of tokenisation. They can only be charged one time for one amount. What’s more, is that such payments can be set to expire within a period of time if they aren’t charged within a designated time window.
The fundamental difference between a virtual card and a credit card is the information that is protected through tokenisation. With a credit card, all your card credentials are exposed each time that you make a payment, which is also often stored by vendors.
This storage of card data can end up being harmful to you and be costly in the event of unauthorized card usage. However, with virtual cards, you never need to share your actual credit card information with anyone.
Why? This is because this type of card is a unique 16-digit card number that’s created with the specific purpose of single-use between a payer and payee. Sometimes, this is called a temporary card number or a pseudo card number. You can create it through a website or mobile app and doesn’t come with a physical card.
You can pay using your virtual card at any vendor that accepts traditional credit card payments, making them a new, innovative, and safer way of making payments. In addition, you can use virtual payments for most online purchases.
And what’s more is that you can also, sometimes, set a maximum spend or charge limit to prevent overcharging. What can’t you do with a virtual card? It’s easy. You won’t be able to withdraw cash. This is because you don’t have a physical card with a magstripe or Chip&PIN.
What is a virtual credit card?
A virtual credit card will have 16 randomly generated digits and a CVV code that can be used to purchase goods and/or services remotely. You can make payments with your card online or by phone, but not in person.
What is a virtual debit card?
Similar to a virtual credit card, a debit card has a randomly generated number that is linked to an underlying debit account instead of a credit card. In addition, you’ll be able to make purchases remotely but not in person.
What are virtual cards used for?
Virtual cards can be used for a wide range of purposes. Here are some examples:
- Pay for products and services at any online shop
- Purchase apps and software directly from the provider website
- Purchase financial instruments like stocks, foreign currency, or cryptocurrencies
- Game online on different networks and platforms
- Use for online subscriptions
- Use for freelance subscriptions
- And more!
What are the benefits?
One of the first benefits of using a virtual card is that you’ll be able to control your expenses more thoroughly. You can use different virtual cards for different types of expenses besides setting limits on what each card can spend.
While this money comes from the same place, using these cards can give you a much better idea of where your money goes.
Improved security and protection against fraud
The second benefit of virtual cards is their security. Since you’re dealing with randomly generated numbers that expire after a certain period of time or once the amount has been used up, should a fraudster get hold of this data, they could do nothing with it.
You can also pre-set the actual payment amount and link that payment to the invoices you’re making. They can also be disposable or single-use and the details you leave with various merchants can’t be used to access your account later.
Ease and convenience
It happens to the best of us. We lose our cards. But with virtual cards, this is no longer a serious issue because you’ll always have your card stored on your phone.
And even if you lose your phone, you’ll always be able to log in from your newly replaced one – simply log in to your account from your new phone or from another phone using your account details.
We can say that virtual cards are the way of the future. Not only are they safe, but they’re a more convenient version of credit and debit cards. You can use them at almost any merchant that accepts credit cards, and you never have to worry about your security because of the randomized numbers generated which expire after every use.