What are virtual credit cards and how do they work (2024)

Digital payments are gaining momentum. Juniper ResearchThe global value of virtual credit card transactions is expected to reach $1.9 trillion in 2021 and $6.8 trillion by 2026.

B2B payments account for 71% of all transactions worldwide, and virtual credit cards make paying online (and in stores) safe and easy. Mobile Payments 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 real credit card. Instead of a plastic card in your wallet, a virtual credit card resides in your phone. It’s essentially a randomly generated card number that’s tied to your bank account, but it’s not the same as a real credit card number.

How does a virtual credit card work?

Virtual credit cards protect your payment information when making online purchases by masking your account information. Virtual card issuers generate a random card number, expiration date, and security code (CVV, or Card Verification Value) that is associated with your account.

This means your personal information stays safe and transactions appear on your account statements just like if you used your regular card details.

Benefits of using a virtual credit card

Why use a virtual credit card instead of a physical one? There are a few reasons.

Safety and Security

Electronic Payments Virtual credit cards are more secure than physical cards because encryption limits the amount of data shared, reducing the chances of fraud and misuse. ChargebackWith no magnetic stripe or visible card numbers, hackers have fewer ways to access your card information.

In the unlikely event that your virtual card is compromised, you can lock your account to block fraudulent activity.

Take full control of your spending

Virtual cards typically allow you to choose your currency, set spending limits, customize the validity period for a specific card number, and can be set to close after a single use (sometimes called a “disposable card”), meaning that once you’ve made a payment, your card details cannot be reused.

Convenience

Convenience is one of the main attractions of this digital Payment OptionsThere are no physical cards to lose or manage, no plastic waste, and best of all, if you have multiple employees, they can all make payments from their own mobile phones rather than having to share a physical company card.

Rewards

A virtual credit card allows you to earn rewards and benefits without having a physical card. For example, Shopify CreditsEarn up to 3% cash back each month on your most eligible spending category (marketing, fulfillment, or wholesale), plus 1% cash back on eligible purchases in the other two spending categories.*

Uses for Virtual Credit Cards

A virtual credit card eliminates the need for a physical card when making online payments and can be used in almost the same ways as a standard credit card. business credit card for example:

• accounts payable: Use a virtual card to pay for business expenses like vendor and contractor invoices.
• Business Travel: Pay virtually for work-related lodging, airfare, meals, rental cars, and other expenses.
• Expense Management: Create a card with a spending limit for a specific purpose.
• Subscription Management: Easily manage, monitor, and cancel software subscriptions for Zoom, Canva, QuickBooks, and more.

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 implements security features such as two-factor authentication (2FA) or multi-factor authentication (MFA), the ability to review and flag suspicious payments, and the ability to lock your card.
• Card Features and Customization Options: You’ll also need the ability to create disposable 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 model: Find out if the card has an annual fee, set-up fee, foreign transaction fee, etc. You should also check the virtual card provider’s interest rate, available credit limit, transaction volume, cashback and other perks.

Get a virtual Visa® business card with Shopify Credit

Shopify Credits is a fully prepaid business credit card with no annual fees and no credit check. Designed for Shopify entrepreneurs, this card sets your credit limit based on your business performance**, not your credit score. Once approved, you can use the card for everyday business transactions and smoother cash flow.

Once your Shopify Credit is approved, it will be automatically activated and you will be provided with a virtual card that you can use right away.*** You can also request a physical card to be sent to you by mail, which will take 5-7 business days to arrive.

Shopify has partnered with Stripe Payments Company and Celtic Bank to provide Shopify Credit. The Card Products are issued by Celtic Bank under license from Visa USA Inc. Issuing bank terms and Shopify Credit Program Terms.

* “Cash Back” refers to rewards earned as a percentage off eligible purchases. Earn 3% Cash Back as a statement credit on eligible purchases up to $100,000 USD per year in your top monthly spend category: Marketing, Fulfillment or Wholesale, then earn 1% Cash Back thereafter. Earn 1% Cash Back in the other two spend categories. Limits apply. Rewards Program Terms For more details:

** Periodic reviews will be conducted to assess your eligibility for an increase in your credit limit. If you are eligible, you may accept the increase at your discretion.

***Once approved, you’ll receive a virtual Shopify Credit business card that you can use immediately.