Good and Bad Sides of Using a Virtual Card

Until a few decades ago, it was almost unthinkable that there was any other way to pay than cash. However, over time, the financial market has become increasingly competitive, and technological advances have brought new means of payment.

Thus, wire transfers, credit cards, and digital money transfers have developed. Also, the use of electronic money has recently become increasingly popular. You can check this link to learn more about different payment methods used in e-commerce.

Virtual cards are a convenient way to pay for things without having cash. They work just like any other card, meaning they can be debit or credit. But instead of having a tangible piece of plastic, you have an app on your phone or any other smart device. Simply put, this digital wallet replaces your physical wallet.

This technology has been around for years but has yet to catch on with users. More and more companies have been creating payment apps, but these services are not yet household names. However, well-established platforms overcome these problems by bringing digital payment solutions to consumers. Besides, they succeeded in providing reliable payment platforms that make managing virtual cards a hassle-free experience.

What Is Virtual Card

A virtual or V-card can be used as either permanent or temporary means of payment. It represents a customized app with randomly generated numbers resembling the bank account you linked. Also, you can set spending limits based on the amount of money you spend on each transaction. And every time you make a payment, the funds are subtracted from your balance.

You can use a virtual credit card (VCC) in the same way. When you make a purchase, it goes to your revolving lines of credit. It’s usually linked to the underlying bank accounts. You pay interest and fees for using this app, just like any type of loan.

Electronic numbers on VCCs are unique to each user. They have nothing to do with information about your bank account and can make purchases online or in shops. Also, you can cancel these transactions without affecting your balance. These apps also have a set daily limit so it’s easier to control your costs.

Digital vs. Virtual Card

The terms’ digital’ and ‘virtual’ are not interchangeable when it comes to VCCs. Neither involves a physical piece of plastic, and you can use both for contactless online and offline payments. Also, both methods are accepted by most merchants that accept electronic money. Yet, there are a few critical differences.

Digital VCCs are the same as your plastic credit card, only in a digital form. That means they have the same information (card number, expiry date, and CVC), and it’s stored in your phone. You can use them for ATM withdrawals and offline purchases, as most POS terminals accept contactless payments. That brings a lot of conveniences but makes your data prone to hacking.

On the other hand, you can’t always use virtual cards for offline purchases. That’s because it requires compatible payment terminals, which are not widely available. These are usually devices with NFC technology embedded in them.

VCCs have unique information which changes after every use. That makes these means of payment more secure than digital or physical cards, especially when it comes to online transactions. As a result, they are less susceptible to fraud and data misuse. Even if you spot any fraudulent activity, it’s easy to freeze your card in a few minutes.

Ease of Use

One of the most significant benefits of virtual cards is their ease of use. The software and apps available enable anyone to apply for these payment means. But, first, you need a computer or smart device that supports NFC technology, which is the case with most modern devices.

The next step is setting up an account at a particular payment platform and following the sign-up steps. Next, you’ll have to link an existing bank account with your new V-card. Once you’re done, the issuer will notify you about the account verification. After that, the VVC numbers will be added to a digital wallet or copied to a device. The entire process will last no more than a few minutes.

Safety of Use

As explained on, VCCs are secured by encryption, so you can use them as a safe and convenient way to pay online and in-store. Their numbers are tied directly to the merchants – one combination of digits per purchase. Then, after making a purchase, any remaining balance will be returned to your account. That makes this means of payment almost impossible to copy and misuse.

Fewer Fees

Another benefit of VCCs is that they are cheaper than pieces of plastic issued by banks. They don’t require printing and shipping, and you don’t have to wait for them. In fact, you can use these apps as soon as they are installed. Also, there are no maintenance fees, and some issuers even have no transaction fees. You can enjoy some perks like cash-back or rebates on your monthly balance.

Convenience for Businesses

The benefits of VCCs for businesses go far beyond removing paper documents. Companies accepting this payment method can regain cash flow control and eliminate time-consuming paper trails and spreadsheets. Also, it allows merchants of any size to effectively manage cash flow through enhanced reporting, data capture, and instant reconciliation. These apps also ease reporting and accounting tasks.

Merchants accepting this payment method also streamline the entire accounts payable department. All transactions are digitalized and proceed on time. In fact, processing this transaction is so easy that these companies don’t need a separate analyst. That means fewer expenses.


VCCs have a host of advantages for corporate users, too. For example, they can be approved online or through apps, allowing for more convenient social distance payments. So companies can issue them to multiple team members at once. With this feature, they can pay for multiple invoices in one place.

This convenience is enhanced by the automated process, making this app a good fit for the accounts payable workflow. Besides, virtual cards speed up financial transactions and increase cash flow by offering greater spending control for companies. With this method, corporations can limit purchases and control payments and expenses.

For example, remote employees may need to buy office supplies. Giving them access to a business bank account is not wise, regardless of the trust. Virtual cards can help companies implement spending limits and give remote employees one-time access. That’s an excellent way for business owners to prevent fraudulent activities.

Cost Reconciliation

VCCs are helpful for businesses that require recurring payments. For example, they can help merchants avoid losing records of any transaction. So, you don’t need to spend hours checking your expenses. Instead, you can see all your transactions in one place, making reconciliation easy. Also, your accountant can use rules to code payments automatically and add tags before reporting them. That way, every transaction is recorded accurately and completely.

Limited Use

VCCs can be a good choice in most cases, but sometimes, they just won’t work. For example, you can’t always use them for offline purchases due to the lack of POS terminals accepting this technology. Some issuers even provide limited use for online transactions.

The problem can also arise when you are in a situation to request a refund or show your virtual card. For example, you bought a plane ticket that you’d pick up at an agency or an airport. A clerk may ask you to show the credit card for verification before taking your ticket. Since the V-card is a temporary combination of numbers that resembles the actual number of your credit card, a problem may arise because these two data don’t match.

Hidden Fees

Virtual cards can come with extra fees, primarily if you use separate ones for different stores. Depending on the provider, you could be charged an initiation fee when you turn your card on, as well as monthly maintenance costs. Using a V-card can become costly if you’re unclear about these terms.

Another shortcoming is that you can’t use V-cards for cash withdrawal. Although some issuers might provide this service, it can be quite costly. That’s because the issuer pays fees to be included in the ATM networks. So it’s essential to understand all the expenses before deciding to use one.

Hacking Risks

While the security of virtual cards outweighs their disadvantages, these apps are not all-mighty. In fact, the ease of using them has created a potential vulnerability to hacking and fraudulent activity. Virtual cards use a buyer’s identifying information, so anyone with access to the card data can misuse that information. So, if it leaks, it will be easy for someone to use it to commit fraud.

The good sides of virtual cards are ease of use, security, convenience, and increasing acceptance. But since this technology is still new, it’s not perfect. So it can be prone to hacking and misuse. If you decide to get one of these, use them carefully and with the utmost attention.

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