With a virtual credit card, you can make online purchases and payments with a digital wallet without needing to use your physical card.
A virtual credit card has a temporary number, card verification value (CVV), and expiration date that your credit card company issues for making secure (often one-time) online payments.
It’s used just like any other credit card during checkout. The virtual credit card is tied to your account, and purchases are applied to your total account balance.
What is a virtual credit card?
A virtual credit card is a digital-only 16-digit identifier linked to your primary account to enhance online security. These tools mitigate fraud risk by enabling custom spending limits, merchant-specific locks, and flexible expiration dates. Users can generate them on demand through banking platforms, and digital wallets.
Common features of virtual credit cards
- Digital-only numbers: Virtual credit card numbers are accessible only online, via a banking app or website.
- Instant issuance: Virtual card numbers can be issued and used almost instantly, with no delay like when a physical card is ordered and delivered.
- Custom spending limits: Cardholders and financial leaders can set maximum spending limits on a given virtual credit card to control expenses.
- Single use: Virtual credit cards are often created for a single use, reducing the risk that compromised credit card details will be reused after the initial transaction.
How virtual credit cards work
A virtual credit card can be used to make an online purchase. Or, you can add the virtual card details to a digital wallet to make contactless payments in person.
Either way, using a virtual card for purchases works just like any other credit card payment. However, the difference comes from the instant issuance and short expiration of these cards compared to most physical credit cards.
Here’s how it works
- Payer contacts their credit card issuer or payment provider to request a virtual credit card number.
- The financial institution issues a temporary virtual credit card number, CVV, and expiration date.
- The payer uses the virtual credit card number to make a purchase.
- The transaction is charged to the virtual number, and the actual credit account is used.
Benefits of using virtual credit cards
There are many reasons why business leaders and employees might prefer to use a virtual card number for making purchases. Here are some of the benefits they offer:
Enhanced security for online purchases
Many businesses will have employees request virtual credit cards for the enhanced security they provide for online transactions.
As mentioned above, virtual cards mask the actual credit card number and have a short expiration date.
This means that if the virtual card details are compromised or the vendor is hacked, the physical credit card number remains secure and inaccessible to any bad actors.
Control over spending limits
Another benefit for finance teams is that they can set spending limits and other controls on virtual cards to prevent unauthorized use. In turn, they can keep spending levels more in line with expectations.
For instance, finance leaders might impose a restriction so the virtual card can only be used for a specific merchant. Or, they may create custom spending limits for certain teams or departments to reflect their budgets, without impacting others’ cards.
Convenience
Virtual credit cards are also highly convenient for growing teams, as they can be quickly issued and deactivated, unlike physical credit cards.
Plus, since they’re only available digitally, there is no need or worry about managing and securing a growing number of physical credit cards as the team grows.
Use cases for virtual credit cards
From high-risk purchases to subscription payments, businesses and their employees may use virtual credit cards for a variety of transactions.
Temporary card numbers for specific transactions
If an employee needs to make a one-off purchase, using a virtual credit card might be the easiest, most secure way to complete the transaction.
This is especially useful when paying a new vendor or supplier, or for high-risk transactions.
This way, the actual credit card number remains hidden, and the temporary virtual card can be deactivated immediately to prevent future unauthorized use.
Employee expense management
It may also be helpful for finance teams to issue each employee a virtual card number for their individual business expenses.
The benefit of using virtual cards is that teams can set custom spending limits for each employee, aligned with budget constraints. And, they can easily track spending levels for all.
Subscription payments
Teams may opt to use virtual credit cards for online subscription payments. More specifically, using a unique virtual card number for each subscription makes it easier to track spending for a given vendor, freeze the card for unwanted renewals, and set spending limits to avoid overspending.
This can be particularly beneficial for subscriptions with a tricky cancellation process, as the card can be deactivated in just a few clicks without affecting other subscriptions or payments.
As such, a virtual credit card might be a good option for free-trial subscriptions that require a credit card to get started.
Safety and security of virtual credit cards
Businesses and consumers alike may prefer using virtual cards over physical cards in certain scenarios due to the enhanced security they offer. Here’s a closer look at the specific security features they have:
Protects actual credit card details
As mentioned throughout, one of the biggest benefits of using virtual credit cards is that they mask the details of the physical card attached to the account.
Merchants only see the virtual credit card number that was used to complete the transaction, which protects the actual credit card in the event of a data breach or other unauthorized access.
Shorter fraud window
Because virtual credit cards are typically meant for temporary use, businesses face a lower risk of credit card fraud.
A shorter expiration date means fraudsters have less time to make transactions if they obtain stolen or compromised card details.
Instant controls
Quick issuance of virtual credit cards is a big draw for finance teams, but it also means they can freeze or deactivate a virtual card instantly. They can have granular control over a specific card, leaving other virtual and physical cards unaffected and usable.
In other words, if they suspect the card details have been stolen or compromised, they can quickly shut off the virtual card to minimize risk.
What are the downsides of virtual credit cards?
Despite the plenty of benefits to virtual cards, there are some potential drawbacks that finance leaders should consider before issuing them to team members.
- In-person use is limited to vendors that accept contactless payment methods.
- They’re not always a good option for recurring payments, given the shorter time to expiration.
- There may be issues with returns or in-person pick-ups for physical goods, because there is no physical card to produce and match to the order.
Request virtual credit cards from BILL
All businesses that use BILL’s Spend & Expense platform have access to virtual credit cards from the online portal or mobile app.
Employees can request virtual cards to make necessary purchases, all within the budget parameters set by the finance team.
Frequently asked questions
Where can you get a virtual credit card?
Businesses can get access to virtual credit cards through their credit card issuer, bank, or other financial institution. Depending on the provider, they typically have an online portal or mobile app where customers can request and control virtual credit cards.
Are virtual credit cards safe?
Yes, virtual credit cards are generally seen as a safer and more secure payment alternative to physical cards. They protect the actual card information from online vendors, providing an extra layer of security should the card details become compromised. Plus, the card details only live digitally, so there is no physical card that could be lost or stolen and fall into the wrong hands.
