How Virtual Cards Work and How Do Businesses Use Them

Cards have become a staple since the ‘Charg-It’ system (developed in 1946), radicalized the way in which consumers and businesses alike paid for goods and services.

Whether it be debit or credit, we’ve all used cards as a vital means of transacting payments in person or online. Over 70% of Americans have credit cards, with 34% in possession of three or more different card brands.

Yet, with technology reaching expansive new heights and with a pandemic restricting a vast majority of purchases to online formats — the demand for physical cards and virtual cards has become essential.

How do virtual cards work?

Virtual cards are digitized cards that allow businesses and consumers to transact easily. A virtual credit or debit card is a 16-digit random number with a CVV code that can be used to pay for goods, services, and subscriptions online. Virtual cards make it possible to transact with your debit or credit card number without actually using that account number. Virtual cards thwart hackers because the card number cannot be traced back to the original credit card number or debit account. It’s possible to assign an expiration date and a spending limit to a card to further its fraud resilience.

Companies like Apple and Google, have begun to provide their own payment services. They utilize the details from physical cards stored on phones and apply them in a digital format for convenient use in the event a customer doesn’t have their physical card at hand. These digital wallets are helping to establish virtual cards as more mainstream.

What are the business benefits of virtual cards?

Because virtual cards are digital, businesses have a lot more insight and control over every purchase. Using virtual cards to manage business subscriptions, employee expenses, or recurring fees? Allocate a virtual card to each vendor and manage them in real-time. Virtual cards are also more secure, preventing fraud by having one virtual card number allocated to each expense instead of one card for every expense. In addition, virtual cards can help businesses limit or control spending because you can restrict how much a virtual card can be charged and when it can be used.

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