The Rise of Virtual Cards

In “The Way Payments Are Now Done,” 33 payment executives discuss what payments’ “new normal” looks like. “With a virtual card, the customer would be able to immediately resume spending without the hassle and cost of expediting a physical card,” says Mahmoud Abdelkader, CEO of Very Good Security. Read more of his insights in the eBook.

Two decades ago, cash was king. In the past decade, cards have become the standard. Now, we are seeing virtual cards become the next go-to for consumer purchases. As all card issuers fight to be top of wallet, the lag time between a consumer signing up for a physical card and that card showing up in the mail is critical.

With the prevalence of online spending and contactless payments through services like Apple Pay and Google Pay, one way to close that gap is to offer an immediate virtual card with a different number than the physical card, as soon as the customer is approved and the account is created.

The major benefit of virtual cards is the ease of access and utilization. In most cases, online transactions are completed by the user manually inputting the card number, which is a tedious process. If the card isn’t easily accessible at that moment, the user may abandon their cart altogether. By utilizing a virtual card, the user can easily copy and paste all of the card information directly into the online cart, making the experience seamless and lowfriction, and thus encouraging the user to utilize that particular card for online purchases.

As another example of the power of virtual cards, consider a cardholder who is on a week-long vacation and loses their card on the second day. Even if they are able to expedite a new card, it takes at least 24 hours to create the plastic card on-demand and another 24 hours to overnight it to the customer. By that time, they are now on day four, without access to their card for critical purchases like food or transportation. With a virtual card, the customer would be able to immediately resume spending without the hassle and cost of expediting a physical card.

This trend has been accelerated by the pandemic — with post office delays and the chip shortage at a peak, coupled with more online spending than ever before, virtual cards have become the fastest way for card issuers to rise to the coveted top-of-wallet spot. Consumers have heightened expectations for their banks and credit card issuers to have an integrated, easy, digital-first and mobile-friendly experience, and virtual cards are helping to ensure that those expectations are met.