Virtual Cards vs Physical Cards: What are The Differences and Which is Better?

Virtual and physical credit cards serve the same purpose of making payments, with one basic distinction between them - virtual cards are only available for online purchases, while physical cards can be used in person as well.

That just might be the only advantage physical cards have over virtual ones. In almost every other aspect virtual cards prove safer, simpler, and easier to control. So it’s no surprise that in recent years, virtual cards are gaining momentum and becoming increasingly popular, having already been embraced by the major banking institutions and digital wallet services like Google and Apple Pay.

Let’s take a look at the some of the pros and cons of virtual cards:

1. Safety

While physical cards are exposed to theft and fraud, virtual cards can’t be stolen or lost. The information a virtual card carries is limited to a single purpose, ensuring the company's original account and credit card number remain private.

Let’s take a real-life example: Revolut, UK’s biggest fintech company, offers businesses both physical and virtual cards. The major difference - each team member can receive up to 3 physical cards, but with virtual cards the number skyrockets to 200. The essentially unlimited number of virtual cards protects sensitive information, forced to be shared with multiple vendors and employees when using physical cards.

Of course virtual cards are not 100% secure. But even in case of a data breach of fraudulent attempt, the threat is confined to a specific card that can be cancelled in seconds, with

no interruption to other planned payments or business.

2. Ease of Use

Virtual cards paired with a smart spend management platform help enhance performance and efficiency. Accounting automation enables employees to request and receive funds instantly, employers to easily set and enforce spend policies, and A/P departments to enjoy the automatic sync to the General Ledger. With physical cards, tedious bureaucracy wastes valuable time and stands in the way of fast-paced opportunities.

Having designated cards for separate vendors, team members, or subscriptions allows for a cleaner and clearer reconciliation and audit processes. Physical cards might eventually produce a similar overview, but only after rigorous accounting work and only at a specific point in time. The real-time visibility granted by virtual cards provides companies with big picture context and the opportunity to make the best decision at any given moment.

3. Control  

Control is key in effective financial management. Some physical cards offer limit settings. Prepaid cards, for example, are a type of debit card, preloaded with a certain amount of money but unattached to any bank account. Although they can be limited for the initial deposit or reloaded, similar to virtual cards, prepaid cards offer narrow options and none of the automation benefits or added layer of security.

With virtual cards, companies can have better control of non-payroll spend. Applying limits on virtual expenses, expiration dates, and usage reduces the risk of overspending, costly auto-renewals, and discrepancies.

But you don’t need to choose. Global spend and procurement platform, PayEm uniquely offers its customers flexible payment options, including virtual and physical cards as well as a credit line. So you can instantly approve, track, and manage vendors, subscriptions, and funding requests in an instant while viewing real-time spend staying in control.