Virtual cards are expected to replace physical cards (in the future) for all sorts of private and business transactions. We can assume the domination of virtual cards in the payment industry since the digitization of every aspect of the globe is imminent soon.
Digital payments via virtual cards are not a big thing in the future, and its evolution is on the way since many banks and card companies have started their implementation.
We all know that everything comes with its good and bad aspects. So do the virtual cards. Virtual cards have their limitations as well as advantages. This article discusses (both) the pros and cons of the virtual card under the topics of various reasons to use a virtual card and reasons to avoid it.
6 reasons to use a virtual card (The Pros)
1.Set limits to avoid overcharge
Virtual cards offer flexibility and customization with the credit limit per daily transaction. This limit is dynamic and completely in your hands to modify to meet your spending limits per transaction.
It also restricts the vendors from overcharging you for the products and services you’ve bought from them. You can set a spending limit per transaction and pay only what you (actually) owe them.
This isn’t possible with a physical card number since the vendors can deceitfully modify your payments and overcharge you. Eliminate this issue using a virtual card.
2.Control your vendor payments
Businesses that need to deal with multiple vendors and manage recurring payments through a single business account can make the best out of virtual cards. Companies can request the issue of numerous virtual card numbers based on a single business account.
You (referred to as business) can provide every vendor with a dedicated virtual card for recurring transactions. You can block a specific card if a particular vendor conducts a deceitful act regarding transaction payments, and this will not hamper other parties and their transactions.
This approach doesn’t apply to using physical cards since you must provide the same card number to all the vendors. And if anyone (of them) deceitfully alters the transactions and payments, it creates (complete) havoc disturbing every related vendor transaction.
A virtual card eliminates this situation, completely maintaining seamless business relationships and transactional payments with the vendors.
3.Protection against fraud & forgery
Customers can decrease or even eliminate the impact of fraud and forgery using virtual cards while conducting business transactions. Users can assign a dedicated virtual card number to a specific merchant, which checks and streamlines any unfortunate incidents.
You can detect such deceitful acts, block the related card, and even present it as proof for legal actions. It doesn’t mean that a virtual card serves a single merchant, but you can assign it to specific ones for better analysis and regulation.
The other aspect is when you conduct businesses online, your physical card provides every personal identification detail to the vendor, which might be misused or lead to identity theft in case of hacks and cyber-attacks.
The virtual cards help eliminate these issues by limiting the details you provide to the vendors. Its customization flexibility allows you to confine the card to a single-use and auto block, preventing vendors from further misusing your identification details.
4.Employee expenditure management
Your business can easily manage the expenses of employees in various aspects of the company.
First, you do not have to create multiple business accounts to facilitate your employees dedicated physical cards. You can create numerous virtual cards based on a business account and manually control the payment structure and limits as needed.
You also can limit the transaction rates, limits, and places of expenditure by your employees. This approach has proven effective in reducing and eliminating the potential misuse of the company finances. The best part is you can prevent such incidents from happening in the near future; better safe than sorry.
Physical cards do not have these options for your business to prevent mishaps. There is a massive possibility of misuse, and you cannot prevent it from happening. You only realize the truth after accidents, creating problems for your business, leading to unrecoverable situations.
5.Easy and reliable alignment of business expenses and goals
Most banks allow your business to manage your company funds based on various categories with dedicated virtual cards. The expenditure limits and alignment with flexible customization make it easy for your business to spend according to the business goal.
It sets specific spending limits for different departments, and they must meet their department goals within the spending limits. This approach helps businesses determine the performance of various departments and restructure the budgets accordingly to reach their goals.
Underperforming departments will become easy to access and analyze for more promising restructuring, allowing businesses to focus and improve on their weaker departments, leading to the ultimate triumph of the business goals.
This alignment of budgets for various departments is possible with physical cards, but you cannot track the actual department expenditure and their performance within the allocated budgets.
As every department uses the same account, the expenses require further segregation and analysis for in-depth information.
6.Easy creation and cancellation
These virtual cards are easy to create since banks do not need physical materials to make one. They require dedicated systems and software to generate the necessary virtual card numbers.
Unlike plastic cards (credit/debit), virtual cards do not need days and weeks to create and implement.
Businesses can put these virtual cards to immediate use once the related banks and card companies provide them with one. Businesses can request multiple virtual cards from a single business account to facilitate numerous vendors and employees.
The next best thing is you can customize the settings to meet your business requirements and even cancel the card in case of unfortunate mishaps and misusages.
Physical cards take weeks to get made and put into effect and don’t support customization; neither get canceled immediately. You need to contact and conduct follow-ups, which may be time-consuming and tedious.
5 reasons to avoid using a virtual card (The Cons)
1.Limited to online usage
The usability of virtual cards is limited to online or on the internet. You cannot operate these cards outside the bounds of the internet and even some local markets where the internet is available.
Unlike physical cards, you cannot use them to withdraw money from virtual cards in offline mode. The usability of virtual cards is limited within the online world, offering you elegant and effective services.
2.Limited availability
The use of virtual cards is limited to specific countries around the world. Virtual cards in developing and underdeveloped countries are not an option. The infrastructures are not suitable for virtual cards, and it may cost them more if they somehow host it from other countries.
Even in developed countries, the pace of virtual card implementation is not at its peak. Gradual increments can be seen in the market; still, it will take years for complete implementation and acceptance.
3.Not a necessity
Virtual cards are not necessary to conduct online businesses. We can give them credit for simplifying business expenses to analyze and make decisions, but we can operate without virtual cards. Physical cards are enough to complete business transactions.
Banks and financial companies have incorporated strong security to prevent fraudulent activities during and after online transactions. Virtual cards have stepped up the game but are not mandatory.
4.Fraudulent activities are still a possibility
Eliminating fraudulent activities is still not possible using virtual cards if proper time and payment limits are not set properly.
The base of fraud elimination is the appropriate inspection and rules/condition implementation. Using virtual cards doesn’t automatically eliminate fraudulent activities.
5.Not suitable for recurring payments
As mentioned earlier, these virtual cards have time limitations and go out of functionality after that time. You should make recurring payments every time after the time ends. If the virtual card’s time expires before the payment period and you forget to check for those details on time, your services may get interrupted.
These situations may prove costly to businesses where time is money and seconds correspond to millions.
Conclusion: Virtual cards and their future
Virtual cards will gradually grow globally with time, and with proper implementation, they can become the best alternative to physical cards in the future. Since digitizing every aspect of business and private life is imminent, virtual cards will take over the payment industry one day.
As of now, you don’t need virtual cards for online transactions. However, they can be useful in specific situations, like purchasing products and services from an untrusted website or service provider. Then again, why would you buy products and services from such sites and service providers?
You might argue that virtual cards are good for one-time purchases and avoid unauthorized and deceitful payment renewals. Why not cancel such subscriptions before they cost you money?
Virtual cards have pros and cons; it is up to the customers to make the most out of them. Whatever be the type of card or situation, customers can be aware of such fraudulent scenarios and avoid mishaps in private and business life.
