Applying for a business credit card is often an essential step when building your business, since credit cards can help cover online purchases, office supplies, or travel expenses. When you’re approved, credit card companies generally mail a plastic or metal card, but while you’re waiting they may issue a virtual credit card.
What is a virtual credit card?
A virtual credit card works just like a regular credit card, but it’s even more secure. The 16-digit card number and CVV code that your vendor sees is different from your physical card, which helps protect your account from theft and fraud. These cards are accepted most places your regular card is accepted, particularly at tap-to-pay terminals.
Typically, you’ll keep your virtual cards in a digital wallet like Apple Pay, Google Pay, or Samsung Pay, or a payment app like PayPal.
How do virtual credit cards work?
Virtual credit card numbers are different from the numbers on your primary business credit card, but the charges made with your virtual card will be on your regular monthly credit card statement. Depending on the issuer, your charges may be itemized by virtual card number, but the overall balance is what you’ll be making monthly payments on.
Virtual credit cards are popular for online purchases because they can be turned off as soon as fraud is detected. When using a virtual card, you’ll provide the virtual card number, expiration date, and CVV code, but merchants and vendors won’t have access to your actual account number when they charge you.
Why should I use a virtual credit card?
Start using it (almost) immediately
Credit card issuers can give you a virtual credit card number as soon as you’re approved. You can usually start using it within 24 hours—instead of waiting for your physical card to arrive.
Protect your account info
Your credit card number and CVV code differ from your physical card, which protects your account information. You won’t need to reveal your primary credit card number when you use a virtual card.
Prevent identity theft
Thieves trying to steal your identity won’t get far if they somehow get ahold of your virtual credit card number. You can simply shut the card off, stopping their efforts cold.
Track purchases from your account
You can track your virtual card purchases through an online dashboard or mobile app. Issuing different virtual cards to employees can help you monitor their spending.
Share with your team
One of the best features of virtual credit cards is that you can issue them to team leaders and department heads to make their own purchases from the same account without compromising security.
Set spending limits
Look for credit card issuers that allow you to set spending limits on your virtual credit cards. This gives your company more control over employee spending.
What are some potential drawbacks of virtual credit cards?
While virtual cards offer many benefits, you should also consider potential limitations, including:
Short expiration periods
Virtual credit cards are meant to be temporary, so they sometimes have short expiration periods. However, some card issuers offer virtual cards that have the same expiration cycles as your physical card for added convenience.
Some can’t be used in-store
Some stores require physical credit cards to be swiped or scanned at the register, in which case you won’t be able to use your virtual card. Though, many merchants now offer tap-to-pay terminals, so you should be able to use your virtual card if it’s added to your digital wallet.
Potentially more difficult to make returns
Returning an item that you purchased with a virtual credit card can sometimes be more of a hassle than a physical card, especially if your virtual card number has expired. If the store requires your refund to be issued to the original card used for the purchase, you may need to settle for store credit instead.
Unable to verify for travel bookings
Many hotels and car rental agencies like to verify your credit card information upon check-in or car pickup. Unfortunately, since virtual cards come with extra security and protect your actual credit card number, the virtual card number you used for the original booking will not match your physical card. For this reason, it’s usually best to use your physical card number for travel reservations.
Using a virtual credit card to complement your physical card
Virtual credit cards should be used to complement your physical credit card, not replace them. They offer enhanced security and control for team leaders who need to increase their purchasing power or restrict purchases to certain retailers. Look for these and other available features to streamline your operations.