As technology continues to advance, digitization of banking is also continuing to evolve. The traditional debit card was innovative in itself, making online transactions easier than ever.
We have now taken another step forward in time through the creation of virtual debit cards; which is simply just a digital version of the traditional debit card. Read on to learn more about virtual debit cards, the different types available, as well as some pros & cons to consider before opening an account.
How Does a Virtual Debit Card Work?
A virtual debit card is exactly what it sounds like. The main difference between a traditional and virtual debit card is that there is no physical card needed to make payments with.
Just like traditional debit cards, your virtual one will give you all of the necessary information needed to make payments; like pin number, card number, name of holder, expiration date, and CVV. The virtual card numbers you are assigned however, are different from those of your actual account.
This allows one to make payments through a personal account, without ever having to reveal the account numbers. Essentially, you will never have to make payments with your actual account rather through the virtually generated numbers that’re linked.
What Is a Virtual Debit Card
A virtual debit card is similar to traditional debit cards, however they come with an added level of security and ease of use.
Burner Debit Card
A burner debit card or also sometimes referred to as an expiring debit card, is a virtual card meant for single uses. Companies like, Divvy for example, offer one-time use burner cards.
These cards are a great way to manage money as you can set a budget with expiration dates as well as issue them for business projects with limited spending power. Divvy offers unlimited virtual cards which can be a great tool for any business.
By opening a corporate account with Divvy, Divvy will be able to issue you unlimited burner cards for your employees to use. Each card will be unique however all will be expensed from your singular corporate account allowing you to better manage employee spending.
How Do I Get a Virtual Debit Card?
Getting a virtual debit card can be done easily and all from the comfort of your own home. Simply choose the provider of your liking and begin the application process either online or through their mobile app.
The application process is quite easy with no credit checks necessary since the virtual account number will be linked to your checking account. Also since there is no physical card needed for transactions, you can begin using your virtual card as soon as your application is approved.
How to Use a Virtual Debit Card
You can use a virtual debit card almost anywhere that accepts traditional credit or debit cards. As long as the merchant accepts contactless payments, you will be able to use your virtual cards in person.
Virtual cards are accepted by all online retailers that usually accept card payments as well.
Are Virtual Debit Cards Safe?
A standout feature of virtual debit cards is the added layer of security it provides. Because you will never hand over the actual account numbers to a merchant, rather just the virtual account numbers, your account is safeguarded from hackers and fraud.
Also in the case that your account is compromised, you will not need to go through the hassle of canceling accounts and reopening a new one. Because only the virtual account numbers will have been compromised, you will just need to obtain a new unique set of virtual information to continue accessing your funds.
Is Virtual Card the Same as Credit Card?
Yes, a virtual card is the same as traditional debit and credit cards. The main difference is the amount of control you have and the fact that there is no physical card which adds flexibility.
Also, virtual cards are a more secure way of making payments which is an added benefit.
Features/Factors Involved with Virtual Debit Cards
If you are looking to open a virtual debit card, here are some key factors to consider.
Virtual cards can provide peace of mind when spending money, especially when making online payments. Because the account numbers used when making payments are a set of virtual numbers, your actual account identification will never be exposed.
Additionally, some providers will offer you a new card number every time you make a payment for added security. Also because most virtual cards will have shorter expirations and can limit transactions, security is enhanced.
Ultimately, it is almost impossible for someone to defraud a virtual card. In the case of your account being compromised, closing or pausing your account can usually be done through your provider’s website or app very quickly.
Ease of Use and Ease of Issuing
Opening up a virtual card is very easy and can all be done remotely. Most providers will have you follow a simple application process that involves filling out basic personal information.
Unlike traditional debit cards that takes time to process and weeks to get the physical card delivered, virtual cards can all be managed online. Also if you want to issue additional virtual cards to family members or employees, this can be done easily through your provider’s online site.
When issuing cards, virtual debit cards allow you to limit spending, set expirations on the cards, and overall can help you manage and track spending much more efficiently.
Accounting & Tracking Features
Virtual debit cards allow you to include automatic accounting syncs that can help improve tracking of expenses. Many providers will allow you to streamline your accounting process and make transaction reconciliations easier.
Top 3 Virtual Debit Cards
Divvy is quickly becoming the leading provider of virtual cards and offers many expense management and business solutions, all with zero fees. With multiple cards offered, for different business solutions, Divvy offers the best support in money management as well as flexibility for their customers.
This provider promises to better protect users from over charges and fraud through providing absolute visibility into every payment transaction. Some of the standout features of Divvy include:
- Unique 16 digit card number for each vendor
- Track spending in real-time
- Instant notifications
- Manage recurring payments & limit spending through a budget
CoinZoom is an excellent virtual card option for investors in crypto. This platform provides users with a way to spend their crypto through a virtual card as well as earn rewards and cash back in crypto!
Some of CoinZoom’s standout features include:
- Spend cryptocurrency like cash
- Earn 1-5% back on each transaction in crypto
- ATM access
- Offers a physical card for those who want both a virtual and traditional card
Payoneer is one of the largest payment processors in the world, and now offers the Digital Purchasing Mastercard. Sign up and approval can be completed within minutes, and you will be allowed to use the card anywhere Mastercard is accepted.
Here are some of the standout features:
- Streamline expenses by using multiple virtual cards
- High daily spending limits
- Instant access
- Manage international payments & currency exchanges
Advantages of Virtual Debit Cards
There are endless benefits of using virtual debit cards. Some of the standout advantages include:
- Ease of use & convenience
- Added security from fraud
- Spending controls & easier money management
- Better visibility of spending
- Streamlined accounting
Disadvantages of Virtual Debit Cards
With advantages, always come some disadvantages. Some of the downsides to having a virtual debit card include:
- Limited availability, however more and more financial institutions are adopting virtual cards
- While virtual card payments are accepted by a lot of vendors, not everywhere will accept it
- Generally, cannot be used to withdraw cash
Virtual Vs. Traditional Debit Cards
Virtual and traditional cards are very similar however have some key differences. For one, a traditional card allows you to spend money through a physical card whereas virtual cards do not.
Also, virtual cards will protect your account number by assigning an unique, virtual card number, whereas with traditional cards, your account number will be available to any merchant you use the card with. For this reason, virtual cards are less likely to be hacked and defrauded.
Essentially, both are the same in the sense that you get an account number, expiration, and CVV code that can be used to make payments. One factor to note though is that as virtual cards are more recently on the rise, meaning they will not be as widely accepted as traditional cards.
Are You Ready to Digitalize Your Spending?
Virtual cards are quickly gaining popularity for their ease of use, convenience, as well as for their added layer of security. These virtual cards are also a popular solution for many businesses for their streamlined accounting functions and clear visibility of all payments.
If you are interested in opening a virtual debit card but don’t know where to start, reach out to your financial advisor. They will help answer all of your questions and help you decide ultimately if this type of card is the right fit for you.