Virtual Debit Card. Should I Have One?
Virtual debit cards have revolutionised how individuals and businesses make and manage payments in different parts of the world. The market for virtual cards was valued at $281.22 billion in 2021. It is estimated to have grown to $1,893.08 billion at a CAGR of 21.3% by 2031.
The future of virtual cards looks so promising that one might think that physical debit cards will soon go out of style. While we watch how things unfold in this regard, take this moment to learn about virtual debit cards, why people use them, and how they can benefit your business.
What are Virtual Cards for Payments?
Virtual cards for making payments are intangible debit or credit cards issued online. They are 16-digit numbers with their respective card verification numbers and expiration dates, all randomly generated.
Most virtual cards are branded by FinTech giants like Mastercard, Visa, and American Express.
Unlike physical debit and credit cards, you cannot hold virtual cards in your hands. Nevertheless, they work just like physical cards in terms of payments. While virtual debit cards are linked to debit accounts with traditional banks or neobanks, credit cards are linked to credit lines from financial institutions. They exist electronically in digital wallets, money transfer apps, and online banking platforms.
How Virtual Cards are Used for Payments
Virtual payments are those made online or over the phone without the exchange of physical currency or the use of a check. The generated numbers on virtual cards are used to securely make these payments.
Depending on your type of virtual card, any hacker who steals the generated numbers may not be able to use them for payments. This especially applies to one-time-use virtual cards that no longer function after you have used them to complete a transaction.
Virtual cards are an environmentally friendly form of payment. They assist in cutting down on invoices and paperwork to speed up payments and foster goodwill between buyers and sellers.
Who are the users of virtual cards and why are they used?
Individual consumers are using virtual debit and credit cards more often, and businesses are now catching up. They mostly use them for online shopping and fraud protection. You can completely avoid online fraud by creating one-time-use virtual cards for online purchases.
Where a virtual card can be used
Virtual credit and debit cards are often used to make transactions online since they are not made of plastic or metal. However, some credit cards can be used to make payments in some physical stores. For example, virtual cards from Revolut can be connected to mobile wallets like Apple Pay, Samsung Pay, and Google Pay to make payments at supermarkets that support these methods. Moreover, some virtual cards can be used to withdraw cash at ATMs that support contactless withdrawals.
How to top up your virtual card attempts
You select the amount of money to assign to a virtual credit or debit card from your deposit account or the credit card from which it was originally issued. The money is electronically transmitted to the number in the selected amount.
If you see that the amount on your virtual credit or debit card is getting low, you can reload it by making an electronic transfer from your bank account. You do not need to take a cash withdrawal from your account in order to reload your cards.
Can I use the same virtual card more than once?
Virtual credit or debit card numbers are often only permitted to be used once. Nevertheless, some virtual cards can be used several times like normal plastic cards. If they are not used within a certain period of time after being produced, they may expire.
Any sum that remains after a purchase is made using the number is then paid back to the account from which it originally came. It is quite difficult to duplicate the cards. You may have the option to create virtual numbers to use for a number of transactions before they are switched off in specific circumstances.
Are virtual cards easy to use?
Virtual cards are easy to use. However, you must install an app on your computer or mobile phone in order to make payments using a randomly generated virtual debit card number. Besides, many virtual card issuers support mobile wallets like Apple Pay and Google Pay, which you probably already have on your smartphone. Also, you can set daily or weekly spending caps using most virtual cards.
For business owners, your workers can use the numbers generated by your virtual card to pay suppliers and merchants online or over the phone once you have given the information to them. The fees are processed automatically through your underlying account or the revolving credit line on your credit card, and they may be made in the same manner that credit or debit cards can be made.
Where to buy a virtual card
Are you looking for a virtual card? We have a list of many virtual card issuers on our website. Compare them to determine which ones will provide you with the best tools for your personal or business needs. Nonetheless, you may ask your bank or the issuer of your business credit/debit card to provide you with a virtual card.
Are virtual cards safe?
Virtual numbers are safer to use when making purchases or payments online or to an unidentified merchant or supplier since they cannot be linked to your account or credit card. The organisations you pay won't be able to overcharge you or use the numbers to make unauthorised purchases on your account.
When you make purchases, these virtual numbers offer an additional level of security. There is a small possibility that someone may take a number you produce and use it before it expires if you delay in using it.
Why People Use Virtual Debit Cards
Not everyone or every purchase will be appropriate for virtual debit cards. However, they are becoming more and more popular, and they could be a great solution for some lifestyle and shopping preferences. Below are seven reasons people use virtual debit cards.
1. Speed and ease
Physical debit cards normally arrive in a few days. In addition to manufacturing the card, the issuing business can need a few days to confirm your identification. Additionally, you might have to wait more than a week before you can start making purchases if you order the card from overseas or before a long weekend.
On the other hand, virtual cards typically arrive right away when your application is finished. You may check the card data in a few minutes without actually having to "make" the card. This implies that you may start spending right away and that all significant payment processors accept them.
2. Safety and security
The near impossibility of stealing or copying virtual debit cards is one of their most appealing qualities. Virtual debit cards are nearly impossible to compromise, in contrast to physical debit cards that thieves can steal or copy. For instance, the third most frequent type of e-commerce fraud is account theft, in which thieves steal your debit card and use it to make transactions online without your knowledge. With virtual debit cards, this would simply not be feasible because there is no way that thieves could physically replicate the card itself.
3. Multiple card issuance
Do you have a group of staff members or collaborators that shop for your company's needs? If every employee uses the same corporate credit card, it may be very difficult to keep track of spending and difficult to determine who is using the card the most. In contrast, a virtual debit card allows you a quick way to issue numerous cards simultaneously, giving you a way to more easily track who spent what.
4. Option to set a limit on your spending
Because you may choose the maximum amount that can be charged to the card, virtual cards are a popular option for some types of purchasing. Professional gamblers and esports players who want to place strict spending restrictions on themselves frequently use virtual debit cards. They are a desirable alternative for employers that set personal spending caps for employees as well as for parents who wish to restrict their kids' internet shopping.
5. Single-purchase advantage
You may wish to use a card for one or two transactions in a number of circumstances. You could be making a one-time purchase that you don't want to show up on your regular bank statement, purchasing something from a website you don't really trust, or for another reason. With a virtual debit card, you may open an account, make a transaction, and quickly revoke the card with no restrictions.
6. Cheap cross-border payments
International payment service providers charge fees. Using physical cards for overseas transactions can easily attract and accumulate fees, especially if your company deals with a lot of foreign partners or business associates. Here, virtual debit cards are a fantastic alternative to physical ones. In contrast to what you may anticipate from a regular high-street bank, you can frequently make payments in local currencies and typically pay significantly cheaper transaction costs when using virtual debit cards.
7. Pro-environmental effect / not plastic
Using virtual debit cards lessens your environmental impact because no tangible card needs to be made and delivered to you. A single card might not seem like much, but there are more than 20 billion physical cards in use for payments worldwide, and millions of them need to be renewed each day. A complete halt to the use of plastic cards would have a substantial environmental impact on a worldwide scale.
What Can I Benefit from Using Virtual Debit Cards?
Virtual debit cards come with a lot of perks for users. That is why more people are going for them. Below are the main benefits of a virtual debit card.
1. Safety and security
It goes without saying that using a virtual debit card is safe since it is secured by a mobile application password and other technologies commonly used in securing payments. Besides, virtual debit cards cannot be mimicked or replicated in any manner, unlike physical debit cards, which can be vulnerable to theft, loss, and cloning.
2. Instant activation
A virtual debit card is already fit to use the moment it is issued, in contrast to a conventional debit card, which has to be activated through an ATM, SMS, phone call, or any other method. So, you do not need to spend time activating a virtual card.
3. Many attractive offers
You can use a virtual debit card to access a variety of online offers while shopping. It may also be used to gain bonus points, which can then be redeemed online or via the mobile application of the issuer. Moreover, depending on your location, you may be able to use virtual cards for Facebook and Google Ads with special rewards.
How Can Virtual Debit Cards Benefit Your Business?
If you are considering whether you can use virtual debit cards for your business, go ahead! Some financial experts claim that adopting virtual credit or debit cards at your company can help you do away with the need to write cheques, helping you save time and money. It can help you avoid paying the fees associated with processing cheques, invoices, purchase orders, and requisition forms.
Additionally, with the virtual numbers you create, you can easily impose limitations on what employees can buy. Besides, You can simplify your payments and expenditure management by using virtual credit and debit cards.
So, there are many benefits your company can gain if you take this step. Consider the following advantages virtual debit cards can give to your business:
1. Instant access to new debit cards
Waiting days or weeks for new card accounts to appear is one of the main hassles with applying for physical cards. On the other hand, virtual cards may be activated and used for online transactions practically instantly, allowing you to access your money more quickly.
Most card issuers allow virtual cards to be linked via Google Pay and Apple Pay, enabling contactless transactions by attaching your card to a mobile device. Thus, making payments easier for your business.
2. Empowerment of staff
Multiple team members who are expected to make payments each day can be given virtual cards. Staff can be given individual virtual payment cards, so they don't have to ask their boss or accounts department for access to the one physical card needed to make a payment (or go through the tedious process of obtaining a corporate card yourself).
The spending caps on each virtual card may be established by the management, allowing them to tightly control their spending while making company payments and letting their staff know precisely how much they can spend. Your firm can operate considerably more quickly if payment barriers are removed.
3. Easy reconciliation
Nobody likes to follow up with several individuals to find out why a transaction was made. It is time-consuming! However, it is essential for each firm to reconcile costs to the appropriate account. With virtual payment cards, you can easily transfer ownership to a certain individual, department, or expenditure code.
Some cards are equipped with expenditure management tools to make the back-and-forth accounting process precise and touchless. Besides, you have more control over your card usage thanks to custom rules and spending limitations, which enable real-time examination and approval of transactions. Additionally, you will never have to look for a lost receipt again thanks to the AI receipt matching, automated categorization, and accounting software interfaces that certain virtual cards have.
4. Enhanced accountability
Improved monitoring and accountability for your company's finances are provided via virtual debit cards. It gives you complete transparency into where your money is going and why by enabling you to attach virtual cards to certain providers or merchants. After that, your card management system immediately logs any purchases made with this card. No more mysterious payments: everything is cleanly handled, labelled, and accounted for. This is a fantastic chance to cut down on the time your accounts department spends looking for expense receipts.
5. Extra security
Online payments can be made safely and securely using virtual payment cards. They cannot be reproduced like physical cards. There is nothing tangible that can be taken. Some of them may even be set up as single-use cards, which prevents subsequent fraudulent payments from using your card because they expire immediately after being used.
Since reputable card issuers like Visa and Mastercard often issue high-quality virtual cards, all payments are provided with the same fraud checks and security features as the rest of their card network.
6. Instant availability
Virtual cards were previously only available to huge organisations, but thanks to recent developments in FinTech, regular businesses may now use these products as well. The majority of virtual card issuers let businesses quickly design their cards. All you have to do to begin creating them for your business is create an account, which can be done entirely online.
7. Cost-effective usage
When you add up the costs and the additional cardholder fees for each employee’s physical card, this expense can easily balloon into a large budget line item for your company. Think about it!
You may construct virtual cards to fit your ideal business structure because they are typically offered without an annual cost or signup fee. The line of credit is the trade-off here, but if your company can do without it, virtual cards can save you tens of thousands of euros annually.
Are Virtual Debit Cards Safe and Secure?
Virtual debit cards do have a few security issues despite their increased use and convenience. First off, what if someone manages to steal your phone and finds many of your cards saved on it? Do not worry. Nowadays, the majority of smartphones have biometric security features like fingerprint and facial recognition for unlocking them.
The same security procedures or a PIN may be required to access some payment apps, including Google Pay. This implies that it will be challenging for someone else to use the virtual debit card on your phone for contactless transactions.
Best Virtual Debit Cards
What virtual debit cards are the best for personal and business purposes? Below is our list of them. They are easy to create, safe, secure, and reliable.
Monzo is an England-based company that provides individuals and businesses with innovative products and services that help them stay on top of their finances. In 2022, it was voted the Best Business Banking Provider of the Year in Britain.
Among its card products, Monzo offers virtual debit cards that you can use to manage your expenses in separate pots, whether as an individual or a business. Besides, you can create Monzo virtual cards for your employees and simplify your accounting process.
Revolut is a neobank that offers virtual cards for shopping online among its many banking products and services. It allows you to create single-use virtual debit cards. The details of the cards refresh when you complete your purchase. This gives added security and safety.
Klarna is a FinTech company famous for its BNPL product. You can get a virtual card from Klarna, which is a one-time-use card. The company allows you to use the card to make purchases from any online retailer that accepts virtual cards. As with physical debit cards, each Klarna one-time card you create will have a different card number that you can use at the checkout.
bunq is an outstanding neobank that offers many banking products, including virtual and metal cards. The Easy Money and Easy Green products of bunq allow users to get up to 25 virtual debit cards for payments. These cards are called “DigiCards.” They are issued by Mastercard.
Monese is one of the best digital banks offering innovative services that most traditional banks are not able to provide. It allows users to create a virtual card for easy and secure payments directly from their mobile phones. The cards support m-wallets such as Apple Pay and Google Pay.
There are generally two types of debit cards: physical and virtual. While you can touch a physical debit card and use it for payments online and in-person, a virtual debit card is not a tangible object but a randomly generated number for online transactions only.
Nevertheless, debit cards can be classified into a variety of types based on how they were designed, the company that branded them, and the purpose for which they were made. So, you may find other types of credit cards in another article.
How you activate a physical debit card depends on the options provided by the issuing financial institution. Debit cards can be activated at an ATM, via SMS, or through a phone call to the issuer.
Yes! A virtual debit card has the essential properties of a physical debit card: a 16-digit number, an expiry date, and CVV or CVC.
You will need to use an ATM to generate the PIN of a debit card. When you get to the ATM, the first step is to carefully open the sealed envelope in which your card was delivered and get the 4-digit PIN that came with it. Insert the card into the ATM, enter the default PIN, and then create a new PIN as prompted. Follow the simple instructions and you would have generated a private PIN for your card. Note that with a virtual card you won’t have a PIN. You will need to use your fingerprint or FaceID connected with Google or Apple Pay instead.
The main difference between a physical debit card and a virtual debit card is that you can touch a physical debit card and use it for payments online and in-person, while a virtual debit card is not a tangible object but a randomly generated number for online payments.
A credit card can be physical or virtual. The difference between a virtual card and a credit card is that the former is intangible, but the latter is.
A virtual credit card cannot be used to make an ATM withdrawal because there is no physical card present. Although you may frequently deposit money into your account at your bank and then withdraw it again by logging into your online account, you should be able to transfer funds to bank accounts if the issuer allows it.
Yes! Virtual debit cards are issued for free. However, some issuers may attach some limits and other types of transaction fees for the use of their virtual cards.
Yes! The presence of a CVV number, a 16-digit debit card number, the cardholder's name, the validity, and other details makes virtual debit cards secure to use. Only someone with access to the banking mobile app that has the virtual card can access these credentials.
Yes! Some banks will allow you to make cardless withdrawals of cash from ATMs when you have activated internet banking and installed their mobile apps on your mobile phone.
During checkout after shopping online, you can use your virtual card number to pay for items selected. The payment is processed using your virtual card number, expiration date, and CVC or CVV.
Try a Virtual Card for Your Next Payment!
Remember that virtual debit cards are not physical cards made of plastic or metal. Although they are referred to as "cards," they are really just random numbers connected to your current bank account.
Both individuals and companies can use virtual card numbers to make safe online payments. The generated numbers add an extra layer of security to the protection of your online transactions and may be configured for single or repeated use. The next time you make an online transaction, you might want to think about requesting a virtual number from your financial institution. Consider choosing from the best options we have provided in this article.