Virtual credit cards are unique 16 digit card numbers tied to an existing credit card that can be created and used for one time or ongoing purchases without exposing the original credit card data.
Virtual credit cards can be digitally created on demand to protect your data and to give you more control over who charges you, and how much money actually leaves your account. Think of a virtual credit card like you’re using your actual credit card…but with gloves. You don’t leave personal fingerprints and you can easily dispose of the “gloves” if they become tainted or compromised.
How to use a virtual card
The beauty of virtual cards is that, anytime you find a need for one, you can create one in just a few clicks. Not all credit cards offer virtual card creation, so you’ll need to check with your credit card institutions for availability. Some credit cards allow virtual card creation through their digital app, and others will use a browser extension for online payments or purchasing.
For example, with a Divvy virtual card, you can create either a temporary card for one-time use or a subscription card to use for recurring purchases. You open the virtual credit card app, select the budget you’d like to use, and create the card by setting expiration and spend limits. Check in whenever you want to see real-time spend and change any parameters for the virtual card.
Pros and cons of virtual cards
Virtual cards vs. Physical cards
You will start with a physical card that is just like any other, and can be swiped in person, or used online or over the phone. A virtual card, however, is just a series of randomly generated numbers and can only be used online or over the phone because there is not a physical, plastic credit card to swipe or insert into a machine.
Virtual cards are safer, easier to control and cancel, and they’re more hygienic. How’s that for convenience?
Virtual cards vs. Digital wallets
It’s important to distinguish between virtual cards and digital wallets. Many banks and credit cards are offering some type of streamlined online payment process that is designed to better protect your data and make purchases faster. But a digital wallet or information-storing technology is not the same thing as a virtual card.
Virtual cards are digitally created 16 digit numbers that are linked to your actual credit card without exposing the original data. Digital wallets are an online storage of your payment information that allows for one-click virtual payments.
Some examples of digital wallets are Visa Checkout, Masterpass, Chase Pay, Apple Pay, Google Wallet, Paypal, and other services that allow you to load in your account information and pay with just a click.
Virtual credit cards for business
Businesses in particular are vulnerable to overspending and inadvertent access to funds. It can be inconvenient to hand over a corporate card for a one-time purchase of supplies, or you may realize that you’ve been paying for a software subscription for months after you thought you’d cancelled. Businesses use virtual cards to maximize efficiency as well as to protect their best interests.
The Association of Certified Fraud Examiners found in their 2018 report that internal fraud is “likely the largest and most prevalent threat” and can cost businesses an estimated 5% of their annual revenue. Credit card fraud within your company is not to be taken lightly, but it can be managed through budgets and virtual cards. You can track each purchase to an individual, set limits on the funds each individual can access, shut off cards with a click, and eliminate unauthorized charges by ensuring all purchases are approved by a budget owner.
Virtual credit card benefits
Pay for licenses, software subscriptions, office cleaners, magazines, utilities, supply deliveries, website hosting & domain names, etc. without worrying about overcharging or sneaky extra payments after you’ve cancelled.
Do your team managers need to provide lunch for employees once a month? Is your office manager in charge of stocking the supply shelves? Does your advertising team consistently overspend on their Facebook ads? You can set monthly budgets in their virtual cards to give them a secure way to spend as they need – but not beyond your budget.
If you are only going to make a purchase one time, say for a promotional sample, you can better protect your company’s credit card and offer a layer of security by spinning up a virtual credit card that can complete the virtual payment without leaving you vulnerable to extra or future charges.
Virtual credit cards and their linked budgets are an accountant’s best friend. It’s faster and easier to see exactly where spend occurred, who spent how much, and stop it as soon as possible when you notice overspending, overcharging, or fraud.
Are virtual credit cards safe?
Virtual cards are incredibly safe and protect your financial information by creating temporary 16 digit codes in place of your actual credit card information.
Data breaches happen, and most online merchants store the data of their customers. Physical cards are also vulnerable, as they can be lost, stolen, or in-store card readers can be compromised. Especially for a business, safety is a primary concern because multiple parties may need to use the same accounts for a variety of purchases.
Who offers virtual cards?
American Express vPayment & AmExGo
American Express created vPayment as a business-only option that allows for a new virtual card creation for each transaction, with controls set such as expiration, budget, and merchant. Each transaction is checked against the parameters set by your company before authorization. The AmexGo app allows for the same measures but is more streamlined and hands-off for contractors, freelancers, and infrequent users.
Citibank virtual cards
Citibank offers virtual card creation for select credit cards – not all. Users must enroll in the extra feature online and then go through the steps in their Virtual Card Creation process to create a one-time use virtual number. You can also designate a time period for the card to function, as well as a dollar limit.
Capital One Eno
Capital One Eno is an interesting virtual assistant linked to a credit card. The technology is a plugin extension to be used on a desktop, making it very easy to quickly generate a virtual credit card number for an online merchant. Eno provides some customization, such as naming the card for the particular vendor, but does not provide budget limits. This means that for each purchase or vendor the limit is your existing credit card limit.
Google Pay is pretty much a digital wallet that brings all points of your finances together into one platform. Securely send and receive money, split bills between friends, and keep track of who has paid for what. They’ve made it so you can keep other online virtual credit cards, debit cards, transit passes, and more within the platform for quick, easy access. The coolest feature they’ve included is the ability to link your bank account, Gmail, and Google Photos to search even more of your transactions.
Like Divvy, PayPal also works with small to medium-sized businesses. Unlike most virtual cards or wallets, PayPal is mainly used as a secure way to pay vendors and merchants. Their biggest win is their payment and fraud protection services as well as their ability to sync with many different shopping platforms like Shopify.
Divvy virtual cards
Divvy offers virtual card number generation to mask your actual credit card information and to better control spend. With Divvy virtual cards you can create a temporary card for one time use, or a subscription card for ongoing payments. The cards are linked to a specific budget, with budget limits set by the budget owner. The budgets can be capped or managed for reset each month. In the event of a cancellation or dispute, the virtual card can be immediately frozen or turned off for better spend control.
How to get a virtual credit card
Options are continuing to grow for virtual credit cards, but they still aren’t universally accessible. Currently there are just a handful of options, and some card issuers only offer personal virtual credit cards without a business option.
To get a virtual credit card, you follow the exact same process as most credit card applications. Apply for one of the following credit cards, making sure it allows for a virtual card option, and then enroll online or in their app to begin generating virtual credit cards for your use.
Divvy virtual cards are different
Divvy’s virtual card platform is simpler, faster, and best of all—free.
Virtual card creation is immediately available to all Divvy customers for free, and can instantly empower all employees to spend as needed to keep your business running smoothly, without handing each individual the keys to the car, so to speak. Each employee can create virtual cards, but budget owners set the parameters to keep spending within reason.
Like other virtual cards, Divvy protects your data and provides the highest level of security for online purchases. We just make it more fun and easy in the process. Our virtual card creation takes just a click or two in our mobile app or online account and you’re on your way. Our virtual card creation offers customization in all fields – budget, expiration, approvals – that aren’t guaranteed with other virtual card creators.