Digital Cards vs. Virtual Cards: What’s the difference?

In the fast-paced world of digital finance, the rise of innovative payment solutions has given birth to two distinct yet interconnected entities: digital cards and virtual cards. Aimed at simplifying transactions and making financial management a breeze, these cards are becoming increasingly popular. Let’s delve into the realms of digital finance and explore the nuances that set digital cards and virtual cards apart, while also uncovering their shared features.

Understanding the Concepts

Digital cards and virtual cards both represent a departure from traditional plastic cards. Digital cards usually refer to a digitised version of physical cards with the same card number, expiry date, and a secret code (CVC). They are stored in your banking or finance app and are linked to the same account as their physical copy.

On the other hand, virtual cards exist solely in a digital format, often generated through mobile apps or online platforms, with no physical counterpart. Therefore, virtual cards don’t just copy–paste the details from a physical card. They have their own set of credentials — a unique card number, expiration date, and CVC. It’s like giving each online transaction its own secret passcode for an extra layer of security.

Similarities and Differences

At first glance, digital and virtual cards might seem interchangeable, but their distinctions lie in tangibility and generation. Digital cards have a physical form while virtual cards are purely digital entities. Both types, however, rely on technology to enhance financial transactions.

Comparing Features and Benefits

1. Security features:

• Employing advanced technologies like tokenization, encryption, and biometric authentication, digital cards ensure a robust defence, fortified further by the integration of mobile wallets and secure payment applications.
• Virtual cards provide an enhanced level of protection as they can be generated for one-off or recurring payments and blocked easily when no longer needed. This special feature really helps reduce the chance that your private financial info could be at risk.

2. Privacy protection:

• Virtual cards are advantageous for online transactions as they can be easily regenerated, enhancing privacy. With virtual cards, you can make purchases without giving away your main card details, making it less likely for someone to steal your data or use your card without permission.
• Digital cards may carry a higher risk of information exposure if their plastic version gets lost or stolen. Transactions made with digital cards are usually tied to your physical card account, leaving a record of your financial activity. Although it’s secure, this setup doesn’t give you the same privacy advantages as virtual cards.

3. Ease of use:

• Digital cards offer the familiarity of a physical card, making them easy to use in various scenarios. Whether it’s making in-store purchases, online transactions, or withdrawing cash from ATMs, digital cards provide convenience similar to traditional cards. But, unlike the latter, they can’t be stolen because they live in digital wallets and mobile apps.
• Virtual cards excel in online transactions, eliminating the need for a physical card. They are created, blocked and reissued instantly with a tap on your phone, making them the perfect choice for online payments and subscription services.

4. Integration:

• Digital cards seamlessly integrate with existing payment systems, point-of-sale terminals, and contactless ATMs.
• Virtual cards are often part of digital wallets, ensuring compatibility with a range of online platforms and marketplaces.

5. Budgeting:

• Both types offer real-time transaction tracking, aiding in budget management.
• Virtual cards may provide more detailed insights into online spending patterns. Additionally, as they are usually created for limited use and are preloaded with a specific amount of money, virtual cards encourage a more money-savvy mindset and help you avoid overspending.

Use Cases: Digital Cards

Digital cards are ideal for everyday purchases, in-person transactions, and situations where physical presence is required, e.g. for withdrawing cash from ATMs. Being digital copies of physical cards, they can be used at any merchants that accept contactless payments.

Use Cases: Virtual Cards

Virtual cards are perfect for online shopping, subscription services, and scenarios where privacy and security are paramount. They are an ideal solution for managing ad campaigns, offering a secure and controlled method for transaction management. Parents can use virtual cards to provide pocket money for their kids, ensuring financial safety and promoting responsible spending habits. Moreover, virtual cards are an excellent tool for budgeting entertainment expenses, allowing you to set spending limits for specific activities. Gamers can also benefit from virtual cards by using them for in-game purchases, providing a secure and isolated channel for gaming-related transactions.

In the evolving landscape of financial technology, the choice between digital and virtual cards boils down to individual preferences and usage patterns. Whether it’s the familiar comfort of a digital card or the transient nature of a virtual one, both options cater to the diverse needs of today’s tech-savvy users.

Get your free virtual card with CFPS

All CFPS customers can get their free virtual debit card instantly right in the app. As soon as your virtual card is created, you can start shopping online or link it to your recurring subscriptions to manage them effortlessly. To make your online purchases even safer, you can set a static password and block your card anytime, anywhere via your phone. If you want to use your virtual card in brick-and-mortar stores, you can add it to your Apple Pay or Google Pay wallet for secure contactless payments.

FAQs

Can I use a virtual card for in-person transactions?

Virtual cards are primarily designed for online transactions. However, you can use them for in-person purchases as well if you add your virtual card to your Apple Pay or Google Pay wallet.

Are virtual cards more secure than digital cards?

Both cards offer robust security features, but the level of security depends on usage habits and the context of transactions. Virtual cards provide better protection when you shop online as they don’t reveal your main card details and can be blocked right after the purchase.

Can I link both types of cards to my digital wallet?

Yes, both digital and virtual cards can often be linked to digital wallets for added convenience.

Do virtual cards have expiry dates like physical cards?

Yes, virtual cards typically have expiry dates, similar to their physical counterparts. Renewal or reissuance may be required.

How much do virtual and digital cards cost?

The cost of virtual and digital cards varies among providers. Some may offer them for free, while others may charge an issuance fee or an annual fee. It’s essential to check the terms and conditions of each card for specific cost details.