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Physical Card vs Virtual Card

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedNov 20223 min read

Does your business use a company card for expenses? If most of them are online, you might consider using a virtual card to complete the digital shopping experience. While both allow you to make online purchases, there are some key differences between a physical card vs virtual card. We’ll cover the pros and cons of virtual cards below to help you get started.

What is a virtual card?

A virtual card is a credit card number, CVV code, and expiry date issued by a bank or credit card issuer. It’s provided digitally to be used for shopping online. While you can use a physical card for in-person retail shopping and cash withdrawals, virtual cards are more temporary and digital. However, they’re still linked to a bank and/or credit card account for processing.

The difference between a physical card vs virtual card

There are a couple of key differences to be aware of if you’re comparing physical cards vs virtual cards. The main difference is in their design. A traditional credit card shows your account number, CVV code and expiration date clearly printed on its front and back. A virtual credit card exists only in digital format, without a physical presence. This makes it more secure in some ways, since it can’t be stolen from your wallet. Another difference is that with a virtual credit card, your financial data isn’t disclosed to the merchant. This means it’s a more secure form of payment since there’s no data to hack or steal in a data breach.

Another feature of virtual cards is that they can be locked and unlocked for added security. However, features do vary between virtual card designs and providers so be sure to compare your options carefully.

Which virtual cards are available in the UK?

In the UK, digital banks focus on virtual debit rather than credit cards. Providers like Revolut, Monzo, and Starling Bank offer a choice of standard or disposable virtual cards. Disposable cards are designed for single use, while standard cards can be linked to your digital bank account as well as digital wallets like Apple Pay or Google Pay.

Because these virtual cards are offered through the UK’s digital banking services, you’ll need to choose a provider and then set up your card in the corresponding app. This gives you full control over locking, unlocking, and using your card of choice for online purchases.

Pros and cons of virtual cards

The biggest drawback of using virtual cards is that they’re only suitable for purchases made online. You can’t use them at an ATM to withdraw cash as you could with a normal debit card, either. Another potential downside is that they aren’t always suitable for online business travel bookings. This is because you sometimes need to show your physical purchasing card as proof of ID when you check into a hotel or for your flight.

On the other hand, there are plentiful benefits associated with virtual cards when used in the way they’re intended. The first is the added layer of security they provide. Your financial details aren’t visible to the merchant, protecting you from third-party hacks or data breaches. This significantly reduces the chance of identity theft. As a business owner, it’s also a reason to accept virtual cards as payment since you don’t have to worry about storing data securely.

They’re also great for budgeting because most allow you to set spending limits. You can lock and unlock them for greater control over your company finances, particularly when passed on to employees for business purchases.

Physical card vs virtual card: which is right for your business?

Most businesses will want to use a combination of physical and virtual cards. Both have a time and place; due to the variety of purchases you might need to make. For travel bookings, physical cards are usually a better choice. Yet for everyday online transactions, virtual cards offer numerous benefits.

Of course, there are also some transactions where it’s best not to use a card at all. For example, bank payments can save your business on costly card fees. They also don’t fail as frequently as credit card payments; with bank payments, you don’t need to re-enter card details if your business card is lost or expired. It’s also worth accepting a variety of all three payment types as a merchant. Credit cards incur high transaction costs for merchants, particularly when it comes to cross-border payments. GoCardless enables businesses to pull payment directly from customer bank accounts with Direct Debit. This makes it a convenient, direct alternative to both physical and virtual cards.

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