Definition of Virtual Card

Expense ManagementStartups & Tech Companies
By Team Bento March 12, 2019

​What is the virtual card definition?

What is the meaning of virtual card? A virtual card is not a physical, plastic card. It can either be a virtual debit card or a virtual credit card. It is made up of a series of 16 numbers that have been randomly created along with a three-digit security code. These numbers and code can be used to make purchases remotely just like a plastic card can be used.

Cards that are virtual are generated for you by your card issuer using an API or by you if you have been provided with an API. They represent your underlying credit or debit account, but thieves cannot use the numbers to withdraw money, access your information, or to make purchases. The numbers expire as soon as they have been used, making them useless to people who steal them.

How does a virtual card work?

Cards that are virtual can be generated in seconds. They will be active and ready to be used within minutes. You can specify that they only work for purchases in specific amounts and at your chosen merchants. For example, you might generate a card and specify that it can be used to make a specific purchase in the amount of $499.99 from a specific vendor.

If someone steals the number and tries to charge $499.98 or $500 on it, the purchase will be declined. It also will not work at a different vendor than the one that you have chosen. If the vendor tries to charge additional items to the card, it will not work. The number will expire as soon as your purchase has been completed.

Statistics about the use of virtual cards and online transactions

An increasing number of purchases are made online. In 2019, the total transaction value of digital payments is expected to be $962,027m, which is an anticipated year-over-year increase of 9.5 percent. The anticipated CAGR through 2023 is 8.6 percent to reach $1,339,005m.

The use of checks has steadily declined over the past two decades among consumers. Businesses have been slower to adopt electronic payments with the use of debit and credit cards. Virtual debit and credit cards for online purchases are gaining traction as people search for safer ways to make purchases over the internet.

Who uses virtual cards? Why are they so popular?

Consumers and businesses both use virtual cards. Consumers may be able to get virtual numbers from their card issuers so that they can make purchases online. Businesses may also have virtual card services that they can use to make purchases online or over the phone.

These cards are popular because they help to prevent fraud and offer greater security. The numbers expire as soon as they have been used, so they are useless if they are stolen. The cards do not provide access to your information or to your underlying account.

What is the difference between a virtual card and a physical card?

Physical cards are either directly linked to your checking account or to your revolving line of credit. They are made out of plastic and can be used to make purchases remotely as well as in person at any merchant location that accepts credit cards.

Virtual debit and credit cards are not plastic and are not linked directly to your checking account or to your revolving line of credit. Instead, they represent these accounts. Transactions are routed through to your underlying account to be completed. However, the numbers can’t be used to directly access the accounts. Virtual cards also cannot be used to make in-person purchases.

What is the meaning of “virtual card?”

The definition of virtual card is a card number that is virtual rather than appearing on a physical card. The numbers are randomly generated and expire once they have been used. You can determine how much money to make available on a virtual credit or debit card and then use it to make the desired purchase online.

There are several types of virtual cards, including the following:

  • Virtual numbers that expire immediately after one use
  • Virtual procurement cards
  • Ghost cards
  • Virtual debit cards
  • Virtual credit cards

What is a virtual credit card?

A virtual credit card is a number that provides you with access to virtual credit that you can use to make purchases online or over the phone without having to input your real card number. When you make a purchase with virtual credit, the transaction is routed through to your credit line. However, the number cannot be used to withdraw money or to make additional purchases that will be charged to your credit line.

The number will expire after a single use. The purchases that you make with virtual credit will be added to your credit line, and they will need to be repaid just like any other purchase that you might make with your credit card. If you do not repay the balance in full at the end of the month, the purchases will incur interest charges.

What is a virtual debit card?

A virtual debit card is a randomly generated virtual number and CVV code that represents your underlying debit account but is not directly linked to it. Like a virtual credit card, the number can be used to make secure purchases online or over the phone. However, the transactions are routed through to your checking account balance and are subtracted instead of being added to your credit line.

Since the transactions are subtracted from your own money, you will not have to pay interest. The numbers will not provide access to your account or to your identifying information if they are stolen, and they will expire immediately once they have been used.

What are the advantages of a virtual card?

There are several advantages of cards that are virtual, including the following:

  • Are more secure than plastic cards
  • Do not provide access to your underlying card or account
  • Prevent fraud
  • Cannot be used to gain your identifying information

What are the disadvantages of a virtual card?

The main disadvantage of a card that is virtual is that it can only be used to make remote purchases. Since the cards are not plastic, they cannot be used to make purchases in person at merchant locations with card terminals.

If you want to return an item that you have purchased with a virtual number, it can be difficult since returns are usually processed back to the card number that was used. You can make this a little easier by saving your receipts.

How and where do you get a virtual card number?

If you are a consumer who wants to use a virtual number, you can check with your bank or card issuer. A few large banks offer virtual numbers as a service to their customers, and there are also private card issuers that offer this service.

If you are a business owner, you may find more options. Virtual numbers were originally created as a service to businesses so that they could make more secure purchases remotely. You can check with your current bank or card issuer. There are also a variety of companies that offer virtual business debit cards and virtual business credit cards that you can find by researching online.

If used properly, virtual cards are more secure than traditional cards

Virtual cards are more secure than traditional cards when they are used properly. The best practices for using the cards include the following:

  • Generate the virtual number in the exact amount of the purchase that you want to make;
  • Complete the purchase immediately after the number is active; and
  • Save your receipts.

You should not generate numbers and hand them out without giving your employees information about how to use them. If all of the funds on your virtual card are not used, the money will return to your underlying account.

Who is a virtual card issued to?

Virtual credit cards are only issued to the primary cardholders. Secondary cardholders cannot get virtual numbers from the cards. Similarly, virtual debit cards are only issued to the bank account holder. People who are authorized to use the account will not be able to get virtual debit numbers that represent it.

Limiting the ability to generate card numbers to only the primary account holders is important. This can help to prevent secondary cardholders from generating virtual numbers and using them to make unauthorized purchases.

What is the difference between virtual cards for consumers and virtual cards for businesses?

Virtual debit cards for businesses differ in a few important ways from virtual debit cards for consumers. Business cards may offer more features that are specific to business needs. You may be able to use the numbers to track your expenses by the department or by the supplier. You can also choose to allow your numbers to work for a set duration or to use them for single purchases before they expire.

Business cards may integrate with your company’s software so your transaction data will upload automatically into your digital bookkeeping system. This can let you know precisely where your company’s spending is at whenever you want to check.

The different kinds of virtual business cards companies can use

There are several different kinds of virtual business cards that your company can use, including p-cards, ghost cards, virtual debit cards, and virtual credit cards. A virtual business debit card or credit card number can be instantly generated and used to make single purchases before immediately expiring.

P-cards can be generated and given to a select group of employees so that they can make purchases over a set duration. Ghost cards are good choices for larger companies. You can assign individual ghost numbers to different departments that all of the employees in the departments can use to make purchases for your company. You can also assign a ghost number to a high-volume supplier so that the supplier can charge the purchases to the number instead of having to generate individual invoices repeatedly.

Virtual cards offer robust spending controls

A great benefit of virtual digital cards is the robust spending control features that they offer. Some virtual debit cards allow you to set restrictions on the cards by the location where they can be used, the amount that can be spent, and when they will work.

You can turn card numbers off or on from your online dashboard at any time by tapping a button on the screen of your smartphone. You can turn a number off once an order has been completed and turn it back on again when it is time to place a new order.

Benefits of virtual debit cards for businesses

Bento for Business offers business Visa debit card solutions for companies, including virtual debit cards, p-cards, and ghost cards. The company is focused on helping companies to prevent fraud, increase security, and to control their expenses.

Business owners are able to decide how many cards they need. They can complete the application and set the types of spending controls that they want on each card before distributing them to their employees. Companies can also use the card API to integrate it into their existing applications so they can generate the cards that they need. Alternatively, they can generate the cards through the API from their online dashboards.

Bento has been favorably profiled by leading business publications including Forbes and the Wall Street Journal. It has also received hundreds of great reviews from its thousands of customers on third-party sites including Capterra, BBB, and TrustPilot.

The company offers a single platform from which you can manage your business spending. The business Visa debit cards can work for a broad variety of businesses and can give you full control over the spending that occurs. You can turn the cards on or off at any time from your phone.

You are able to try the Visa business debit cards for free for 60 days, allowing you to understand how they might work within your company’s payments strategy. You can also request a personalized demo to see how they might work. To learn more, call 866-220-8455 to speak to a customer service professional.