What Is a Virtual Credit Card? A Comprehensive Guide

Digital payments are becoming more important. According to Juniper Research, global virtual credit card transaction volume is expected to reach $1.9 trillion in 2021 and $6.8 trillion in 2026.

B2B payments account for 71% of all transactions worldwide. Virtual credit cards offer a safe and easy way to pay online (and in stores where mobile payments are accepted). Learn how virtual credit cards work and how you can use them for your business.

What is a virtual credit card?

A virtual credit card is a digital version of a physical credit card. Instead of a plastic card that you keep in your wallet, a virtual credit card is stored on your phone. Essentially, it’s a randomly generated card number that’s tied to your bank account, but doesn’t match the number on a physical credit card.

How do virtual credit cards work

Virtual credit cards protect your payment information when making online purchases by masking your account information. The virtual card issuer generates a random card number, expiration date and security code (CVV or Card Verification Value) that is linked to your account.

This keeps your personal information safe, but transactions appear on your statement as if you used your regular card details.

Benefits of using a virtual credit card

Why use a virtual credit card instead of a physical card? There are several reasons for this:

Security and Protection

Electronic payments are safer with virtual credit cards than with physical cards. They use encryption to limit the amount of data shared, reducing the chance of fraud and chargebacks. With no magnetic stripe or visible card number, hackers have fewer opportunities to access your card information.

In the unlikely event that your virtual card is compromised, your account can be suspended to prevent fraudulent activity.

Full control over spending

Virtual cards typically allow you to choose your currency, set spending limits, adjust the validity period for a specific card number and even stop blocking it after a single use (sometimes known as a “disposable card”), meaning your card details cannot be used again after a payment.

Convenience

Convenience is one of the main benefits of this digital payment option. There’s no need to lose or manage physical cards and no plastic waste. Best of all, if you have multiple employees, they can make payments via their mobile phones without having to share a physical corporate card.

Rewards

A virtual credit card lets you earn rewards and offers without needing a physical card. For example, with a fully paid-for virtual credit card through Shopify Credit, you can earn up to 3% off your top spending category each month (marketing, order fulfillment, or wholesale), plus 1% off eligible purchases in the other two spending categories.

Uses for Virtual Credit Cards

With a virtual credit card, you don’t need a physical card to make online payments. For example, you can use it for almost anything you would use a regular business credit card for.

• Accounts Payable: Use a virtual card to pay for business expenses, like invoices from suppliers and contractors.
• Business Travel: Pay for work-related accommodation, flights, meals, rental cars, and other expenses virtually.
• Spend Management: Create cards with spending limits for specific purposes.
• Subscription Management: Easily manage, monitor, and cancel subscriptions to software like Zoom, Canva, and QuickBooks.

How to Choose a Virtual Card Provider

Many major credit card issuers offer virtual credit cards. So how do you choose the best virtual card provider? Ultimately, you need to choose the service, security, and features that best suit your business.

Factors to consider include:

• Security and fraud prevention: Choose a virtual card provider that offers two-factor authentication (2FA) or multi-factor authentication (MFA), validation and flagging of suspicious payments, and security features. The ability to block cards has been implemented.
• Card features and customization options: You should also have the ability to create one-time cards, set spending limits, request physical cards, and issue multiple cards.
• Customer support and user experience: It should be easy to view and update cardholder information, add new cardholders, and link to mobile wallets like Apple Pay or Google Pay.
• Fees and pricing: Be sure to find out if the card has annual fees, set-up fees, or foreign transaction fees. You should also look at the virtual card provider’s interest rates, available credit limits, transaction volumes, and benefits like cashback and other perks.

Get a Virtual Visa® Business Card with Shopify Credit

Shopify Credit is a paid-in-full business credit card with no annual fees or credit checks. Designed for Shopify entrepreneurs, the card offers a credit limit based on merchant performance**, not credit score. Once approved, you can use the card for everyday business transactions to keep your cash flowing.

Once you’re approved for Shopify Credit, you’ll receive a virtual card that’s automatically activated and ready to use. *** You can also request a physical card by mail. It will arrive in 5-7 business days.