One of the most promising innovations in the world of business is virtual debit cards. As they continuously prove to be a powerful tool that enhances security and streamlines transactions, they might just be one of the keys to a virtual and technology-focused future.
The Rise of Virtual Cards as the Ideal Payment Method
According to Marqeta, the early virtual cards were meant to be a consumer product and an answer to online fraud. Since they were disposable virtual cards that could only be used once, shoppers could avoid unauthorised charges to their accounts. Virtual cards were then adopted by the B2B travel industry and by the trucking industry as a solution to the challenges of slow payment methods.
Pymnts explains in a 2021 article that we are now “seeing virtual cards become the next go-to for consumer purchases.” As online shopping and digital transactions become more prevalent, the adoption of virtual cards has surged, reflecting a significant shift in how payments are processed. Virtual cards are now the future of money.
Applications and Use Cases of Virtual Debit Cards: How Do Virtual Card Payments Work?
Virtual debit cards provide enhanced security features such as unique card numbers for each transaction and the ability to set spending limits. Below are some use cases for virtual debit cards:
1. Subscription services
Your company may be subscribed to various services and tools that can help enhance your work, such as cloud services, project management tools, video conferencing apps and media subscriptions. When you have a virtual card, you can pay for these subscriptions and set up certain limitations so that the card will only allow specific recurring payments. You have more control over your subscriptions and you get visibility on how much you’re spending each month.
2. Online purchases
When you have a virtual card, you can shop online without sharing your actual credit card number with the merchants. You can also lock or unlock your virtual card anytime for added safety when online shopping. This will not affect your ability to make other purchases with your actual card number.
3. Travel and international payments
Several virtual card providers link virtual cards with a multi-currency account so you can transact in multiple currencies. That way, you can save on currency conversion fees when you travel or pay international merchants. Another benefit is being able to set spending limits to manage your travel budget and avoid overspending.
4. Corporate and business use
Getting a virtual debit card for business purposes is good for your business’s security, control and efficiency. For instance, you can allocate virtual cards to specific projects or events, enabling precise tracking of project-related expenses. You can also opt to provide employees with virtual cards for wellness programs, training or other benefits, allowing for controlled and transparent spending. Simply put, virtual cards help your business maintain better oversight of finances while reducing administrative burdens.
5. Ad hoc/temporary expenses
You can also use virtual cards for temporary expenses so you’ll have a flexible and secure way to manage unplanned or irregular spending. What’s great about virtual cards is they can be set for single-use or limited-time use, reducing the risk if the card details are compromised. Also, you can quickly generate a virtual card for emergency expenses such as urgent repairs or unexpected supplies for your company.
The Future of Payments: Possible Future Trends Using Virtual Debit Cards
1. Biometric authentication
We can expect to see the integration of advanced authentication methods such as biometrics and facial recognition for real-time fraud detection. Virtual cards with biometric authentication are a favourable step to secure digital transactions, combining the flexibility of virtual cards and the robust security of biometric technology.
2. Smart financial management tools
Virtual cards don’t have to be just for payments. In a virtual future, we can see them being linked to apps that provide personalised spending insights, budget recommendations and real-time alerts.
3. Sustainability focus
A virtual future with virtual cards will have continued emphasis on reducing plastic waste and lowering the carbon footprint. This is because traditional physical cards are often discarded and end up in landfills or oceans. Virtual cards help in reducing plastic waste and environmental pollution. Plus, virtual cards do not expire in the same way physical cards do, further reducing waste generation.
4. Emerging markets
As we embrace a virtual future, we expect to see increased adoption of virtual cards in developing countries. This is because, in many of these countries, mobile phones are now often the primary means of accessing the internet. As affordable smartphones become more available, more people can participate in the digital economy and start getting into virtual cards.
5. Partnerships and collaborations
We see a virtual future consisting of growth in partnerships between fintech companies, banks and technology providers to expand the reach and functionality of virtual cards.
Embracing a Virtual Future
Virtual cards’ ability to offer enhanced security through unique card numbers and spending limits, together with the convenience of automated tracking, makes them an efficient tool for handling both routine and ad hoc expenses. As we transition to becoming a digital-focused world, we must embrace a virtual future with virtual cards as these lead to better financial control and streamlined expense management.
With a virtual future, businesses do not only safeguard their financial operations but also adapt swiftly to changing needs, thus fostering a more agile and secure financial future.
