Your Complete Guide to Virtual Cards: Pros, Cons and More

Any professional in the finance and accounting industry has most likely worked with physical credit and debit cards. After all, many see them as an easy and convenient way to make payments and help employees manage business expenses. However, certain issues can occur with these, such as the possibility of stolen or misplaced cards. Now that we live in a perpetually evolving digital age, payment methods have also evolved, giving us virtual cards in Australia which are safer, more convenient and easily manageable.

What Are Virtual Cards?

Virtual cards have the same function as physical cards: they are used for purchases and payments. They even have the same information you see on physical cards—card number, CVV, expiration date and the account it is linked with. The main difference, though, is that virtual cards, as the name suggests, are available digitally.

Virtual Debit Cards

Virtual debit cards are essentially digital versions of ordinary debit cards. They use the same numbers as those on your physical debit card, and you can easily refer to them for your card information—just like with your traditional debit card.

To put it simply, if your 16-digit card number, CVV, expiration date and name are not printed on a physical card, this is likely a virtual card.

You may access your virtual debit card using the app of the bank or provider that supplied it. Whatever charges are made on your virtual debit card are taken from your central account, as your 16-digit card number is directly linked to it.

ProSpend virtual cards, in particular, are ongoing debit cards designed for employees that regularly spend company funds in the course of their duties. They withdraw from a central balance and can replace reimbursements and company credit cards.

How Are Virtual Cards Different From Physical Cards?

We know that virtual cards have the same function and contain the same information as physical cards, so how are they different? Let’s look at them per aspect:

1. Form

The difference in form is notably one of the biggest differences between physical and virtual cards. A physical card shows the account number, CVV code and expiration date printed on it in physical form.

For a virtual card, on the other hand, these details are not printed on a card and exist only digitally. Therefore, it cannot be lost or stolen from your wallet (which brings us to the next point!).

2. Security

Virtual cards are safe, secure and transparent; backed by fraud control. You can instantly block a card or freeze a card or cancel it immediately. Virtual cards do not include account information, just a long number, expiry date and security code. So, it is much more difficult for fraudsters to access your account.

3. Control

Physical cards have limited configurability and no automation benefits or an additional layer of security.

Companies have better control of spending with virtual cards. They can apply limits based on amounts, dates and even which industries a particular card should work with. This helps in reducing the risk of unwanted auto-renewals and overspending.

4. Convenience

Physical cards usually have a tedious system that wastes time. Virtual cards can enhance the efficiency of payments as employees can request and receive funds easily while employers can set and enforce spending policies.

Virtual cards also have real-time visibility that allows companies to make the best decisions at any given time.

What Are the Pros and Cons of a Virtual Card?

Any payment method will always have its pros and cons. Here are the pros and cons of using a virtual card.

Pros/Advantages

• An unlimited number of cards can be issued.
• You can easily manage subscriptions and vendor payouts.
• It can be easily and instantly set up.
• Virtual cards from ProSpend can be used in-store via your mobile wallets and online.
• You can easily and quickly freeze/block it if it gets compromised.
• They can work as both short-term and long-term financial solutions.
• They can be replaced instantly because they don’t need to be requested from a bank, mailed and activated—a process that could take up to 4 weeks.
• They are configurable so you have control over how each card is used.
• They are environmentally friendly and sustainable.

Cons/Disadvantages

• Some merchants still require a physical card for certain purposes (opening a bar tab, checking in to a hotel etc)

What Are the Different Types of Virtual Cards?

Single-use or temporary virtual cards are used for one-time online payments. Since they’re only used once, there’s a higher chance that you’re protected from fraud and phishing.

After one use, all the card information expires, making the virtual card invalid for upcoming purchases.

Recurring/Subscription cards are used for ongoing subscriptions and transactions. Each recurring card can only be assigned to one vendor, and you can set the payment according to the frequency of the vendor’s billing. You can choose the expiration date of recurring virtual cards.

Subscription cards are best for those who regularly make online purchases and want an extra layer of security between their accounts and the retailers.

Many finance and accounting professionals may be used to physical cards, but virtual cards promise convenience, control and an extra layer of security.

Interested in exploring virtual cards in Australia? Book a demo or contact us.