Even though the technology was invented back in 2009, virtual credit cards have become increasingly popular over the last few years. However, you still might not know what virtual cards are and why (or if) you should be using them. In this article, we’ll provide an overview of virtual credit cards and show how they can benefit your business.
How do virtual credit cards work?
Virtual credit cards are essentially digital versions of your business credit card that use a unique digital number instead of a physical credit card number. Once you receive a virtual credit card from your credit card company, you can use it for any online transaction. To make a purchase, you simply use the unique details of your virtual card (typically stored on your device or browser) instead of inputting the numbers from your physical card.
These details are processed securely by the payment system, and the transaction is completed using the available credit or funds. Virtual credit cards are designed to be extra secure and easy to manage. They help keep track of your online purchases and provide added protection against fraud. Using virtual credit cards usually gives you more control and peace of mind when making purchases online.
How virtual credit cards are different from regular business credit cards
Like your physical credit card, a virtual credit card can be used both online and in stores. However, to use your virtual credit card in stores, you’ll need to add it to your digital wallet. Some stores may not be equipped to allow purchases via digital or mobile wallet, so that’s a potential limitation of virtual cards.
Here’s where the two differ: Virtual credit cards provide an extra layer of security by generating unique card numbers for each transaction, protecting your actual card information. In contrast, traditional credit cards use the same card number for all transactions, which could make them more vulnerable to fraud.
Overall, virtual credit cards offer stronger security and flexibility compared to regular credit cards, but you may be limited on where you can use them.
What are the benefits of having a virtual credit card?
There are several advantages to having a virtual credit card, including:
Use it right away
With virtual cards, there is no need to wait for your physical card to arrive in the mail—you can start using it as soon as you’re approved.
Protect your account info
Since there is no physical card to be lost and digital security is high, you are less likely to be the victim of theft or fraud when you use your virtual credit card.
Easily track purchases
Like traditional credit cards, virtual credit cards allow you to track your purchases online in a secure location.
Share access with your team
Virtual cards can be shared with your team members, and you don’t have to worry about keeping track of lost, stolen, or misplaced cards.
Set spending limits
Helpful account management tools within virtual credit card platforms allow you to set custom spending limits so you and your team can stay within budget.
How do virtual credit cards help prevent identity theft?
Virtual credit cards play a crucial role in preventing identity theft by safeguarding sensitive personal and business information. As mentioned above, virtual cards generate unique credit card numbers for each transaction, so that the numbers can’t be reused or stolen. Virtual credit cards typically also have shorter expiration dates, adding an additional layer of security.
How to use a virtual credit card to complement your physical card
Using a virtual credit card in conjunction with your physical card can provide added security and peace of mind as you manage your business finances. Here are some tips on how and when to use your virtual card alongside your physical credit card:
1. Online purchases
Use your virtual credit card for online transactions, especially on unfamiliar or less secure websites. This helps protect your primary card information from potential data breaches.
2. Subscription services
Link your virtual card to recurring subscription services to have more control over payments. You can easily cancel or change the virtual card details without affecting your primary card.
3. Travel expenses
When traveling, using a virtual card for hotel bookings, car rentals, and other travel-related expenses can increase safety and provide peace of mind. If the virtual card details are compromised, your primary card and personal information remain secure.
4. Budgeting and expense tracking
Assign specific virtual cards for different budget categories or departments within your business. This helps you manage expenses more efficiently.
5. Temporary payments
If you need to make a one-time payment to a vendor or contractor, you can create a virtual card with a set spending limit. This ensures that only the designated amount can be charged, preventing any unexpected charges.
Remember to review the terms and conditions from your virtual card provider, understand any fees or restrictions, and regularly monitor your virtual card transactions for unauthorized activity. By strategically using your virtual and physical credit cards together, you can gain more control over your finances, protect sensitive information, and minimize the risks associated with online transactions.
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