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What are Virtual Cards and How do They Work?

Virtual cards as an alternative payment method are becoming more and more common. According to last year’s report prepared by Juniper Research, the number of virtual card transactions will exceed 121 billion worldwide by 2027, which means it will more than quadruple the volume recorded in 2022. Yet, despite the obvious upward trend in virtual card usage, many bank customers still have no idea about what virtual cards are, how to get them, and where to use them. Read on to find out the answers to these questions in our comprehensive guide to virtual cards.

What is a Virtual Card?

A virtual card is an electronic equivalent of a physical debit or credit card that is issued and stored in the mobile app on your phone. The virtual card has its own unique 16-digit card number, 3-digit CVV code and expiry date – just like physical cards. The virtual card can be used to pay not only online, but also in physical stores using Google Pay and Apple Pay.

Depending on where the funds come from, virtual cards can be distinguished into virtual debit, virtual credit and virtual prepaid cards. The virtual debit card is linked to your bank account, whereas the virtual prepaid card should be topped up by transferring funds from your account as it is not attached to it. Virtual credit cards are issued by banks and credit card issuer companies that allow you to borrow funds to make purchases. You should also distinguish virtual cards from digital ones. A virtual card has its own unique card details, while a digital card is an electronic copy of your physical card created for contactless payments using your phone. The digital card has the same card number and CVV code as your physical card.

Why should you use virtual cards and what advantages do they offer? Here are some of them:

  • A virtual card is issued very quickly – usually instantly – so you can start making purchases right away rather than waiting a couple of weeks for a piece of plastic to arrive in your mailbox. This is especially useful for those who travel and constantly change locations.
  • It’s convenient and safe because you don’t have to carry your wallet with you, and your mobile banking app is usually secured with PIN and/or biometric authentication. So, even if you lose your phone, no one will be able to use your virtual card.
  • Typically, a virtual card can be locked and unlocked instantly through an app on your phone. To close a physical card, you must send an official request to your bank and then go through a lengthy procedure to obtain a new card.
  • Virtual cards provide additional protection against online fraud and identity theft. If you only pay with a virtual card when shopping online, scammers will not be able to get your account and physical card information even if the merchant’s website is hacked.
  • Many payment providers allow you to set spending limits on your virtual card, which will help you budget better and avoid overspending.
  • It’s eco-friendly! Thanks to you, there will be one less piece of plastic in the world, as well as fewer emissions from its production.

The only disadvantage of virtual cards is that they cannot be used in places that don’t accept contactless payments but the good news is there are fewer and fewer such vendors on our planet.

How to Get a Virtual Card?

Many banks and payment providers offer their customers an opportunity to open a free virtual card. To do this, you should have an account to which your virtual card will be linked. As a rule, banks allow the issuance of one free virtual card per customer, but some payment providers are more flexible on this matter. To get a card, you need to log into your mobile banking app and apply for it online. Since you are already a customer of a bank or payment provider, no additional documents are usually required. Most often, banks issue a virtual card instantly, but some of them may take up to a few hours to process the application.

Who can get a virtual card? Anyone is the first answer that comes to mind. In fact, it all depends on your status in a particular country and the provider you choose. To become a customer of an incumbent bank, you may need a full package of documents, including proof of residence in the bank’s country, proof of income (payslips or employment contract) and a tax number. Additionally, you will likely have to visit a bank branch to verify your identity and open a bank account. Challenger banks and payment providers are less demanding in this regard: often you need only proof of identity to open an account. And, of course, you don’t have to go anywhere because digital banks and neobanks do not have physical branches.

How to Pay with a Virtual Card?

To use a virtual card for making purchases online, follow the same procedure as for paying with a regular debit or credit card. To begin, select the card payment option on the checkout page. Then open the mobile app where your virtual card is stored and enter the required information in the appropriate fields on the merchant’s website. Finally, confirm the payment. If your card has 3D Secure protection, wait for an SMS from your bank and enter the received code to complete the transaction.

To make a purchase in a physical store, first, make sure that the merchant accepts smartphone payments. Plus, to make a payment, you should add your virtual card to Apple Pay or Google Pay beforehand. If these two conditions are met, all you have to do is open the app, bring your phone to the PoS terminal and make a purchase. It is worth noting that this payment method is more secure than paying with a physical card since the latter’s information can be scanned and stolen using a special device called a card skimmer, which fraudsters install illegally on payment terminals.

To sum up, a virtual card is a convenient, safe and eco-friendly payment method, which is usually provided free of charge. Some payment providers allow you to lock and unlock your virtual card an unlimited number of times, e.g. after each purchase, which further enhances its security. When loaded into Apple Pay and Google Pay, the card credentials are encrypted, so no one can steal them either. If you are concerned about protecting your financial information and want to leave your wallet at home as often as possible, a virtual card is the best option for you.

Get your free virtual card with CFPS

All CFPS users 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.


What is a virtual card?

A virtual card is an electronic card used to pay online and in stores. The virtual card is stored in a digital wallet on the phone and has its own unique credentials like a 16-digit card number, CVV code and expiry date.

How do I create a virtual card?

You can create a virtual card in your bank’s mobile app. Typically, the virtual card is generated instantly with no fee charged. Find the appropriate tab and fill out the form if necessary. In many apps, you just need to agree to the terms and conditions and hit the Open a Card button.

How can I use a virtual card?

For online payments, the virtual card is used in the same way as the physical one, i.e. by entering card details in the required fills on the checkout page and confirming the payment. To make purchases with a virtual card in brick-and-mortar stores, you should first load into Apple Pay or Google Pay. After that, just bring your phone to the payment terminal, and the transaction will be completed.

What are virtual cards good for?

Virtual cards are good for all kinds of purchases as they provide enhanced protection for your financial data when used to pay both online and in physical stores. They can also be used to pay regular bills to better track where your funds are going.

Are virtual cards free?

Banks and other payment providers usually allow you to open one virtual card for free. A fee may apply for the issuance of each extra virtual card. Additionally, some providers may charge a fee for purchases made with a virtual card but this is the exception rather than the rule.

Is a virtual card safe to use?

The virtual card itself is an additional layer of protection for your financial information. Its details are encrypted so fraudsters will not be able to access your account even if the online merchant’s website is hacked or a card skimmer is attached to the PoS terminal. Moreover, the virtual card can usually be locked anytime for better protection.

Do virtual cards have a limit?

This largely depends on the features available in your mobile app and the policies of your bank or payment provider. In general, yes, spending limits can be set on virtual cards at the user’s discretion. This is a handy option for you if you want to manage your expenses and be aware of subscription price increases in case you use a virtual card for recurring fixed payments.

Posted on November 1, 2023