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What is a Virtual Card? And Why Should Business Owners Care?

Widespread data breaches and identity theft have everyday Americans looking for ways to make their information more secure. Card issuers have heard their call and a handful have begun offering virtual cards—aimed at making online spending safer. 

Here’s how they work: a shopper is ready to make a purchase online. Instead of entering their card information, they can request a unique virtual card number from their card issuer. While it will have different numbers than the cardholder’s physical, plastic card, it’s not a new line of credit. Instead, it’s directly linked to the cardholder’s primary account.  

Even though the virtual card and the physical card are linked to the same account, the retailer never sees the physical card numbers. This means that if a vendor is involved in a data breach, hackers will only have access to the unique virtual numbers and not the whole account. 

It’s a little like LastPass, a popular password manager that can generate secure passwords for users and store them in a single vault. The card issuer acts as the vault in this case, keeping all virtual card information in a central location so that users can create as many as they need. 

If a vendor is involved in a data breach, hackers will only have access to the unique virtual numbers and not the whole account. 

Here are the key features of a virtual card: 

  • Users can issue as many virtual cards as they need. 
  • Each virtual card can have its own expiration date, which can be shorter than one year. 
  • Each virtual card has its own spending limit that’s set by the cardholder (though it can’t exceed the total spending limit for the account). 
  • Virtual cards can be issued for specific retailers (ex. A virtual card for Amazon purchases only). 
Virtual Cards for Google Ads, Amazon, and an Employee

Benefits of Virtual Cards

The primary benefit of virtual cards to everyday spenders is added security. They can rest a little easier knowing that if anyone gains access to their virtual card information, the damage is contained. And in the event of a breach on one site, they don’t have to worry about updating their card information everywhere else they have recurring payments. 

In most cases where virtual cards are discussed, they’re presented in the context of individual shoppers. But there are even more benefits of virtual cards to consider when they’re used for business spending. 

Put your accounting on autopilot.

Scalefactor dashboard screenshot

Virtual Card Benefits for Business Owners

Business owners are put in a tough spot when it comes to managing expenses. They’re often handing over their personal cards not only to employees but also for online purchases. 

Virtual cards afford business owners more flexibility in how they manage virtual payments and added protection against overspending. That’s because virtual cards can be created and assigned specifically to vendors.

For example, a digital advertising agency may choose to create a virtual card for Google AdWords and another for Facebook advertising. Another agency may decide to set up virtual cards for each of their clients instead. With individually-selected spending limits, leadership can keep a close eye on their ad spends on each platform (or client) and make sure that they don’t go over budget in any area. 

Virtual cards can also help curb rogue spending among employees. If you’ve got a virtual card dedicated to Amazon with a $500 per month limit, all employees who have access to that card can see how close they are to hitting the spending limit and can work together to manage the budget. 

In other words, virtual cards can make managing expenses a lot easier for businesses with several employees who need access to cards or with distinct lines of business. They let you get creative with how you spend money—and keep track of it. 

Are All Virtual Cards Credit Cards? 

When it comes to individuals using virtual cards, most of the options on the market are credit cards. However, there are a few options that work more like a debit card, allowing users to load their accounts with money that their virtual cards can then draw from. 

The ScaleFactor Card, which is designed for business owners, works like a charge card. The primary difference between charge cards and credit cards is when payments are due. Credit cards can be paid off over time, as long as a monthly minimum payment is made. Charge cards, on the other hand, are paid off in full at the end of each month. 

To learn more about the differences between charge cards and credit cards, check out our recent blog post.

There are pros and cons to each card type, so it’s worth investigating the differences between virtual credit cards, debit cards, and charge cards, and seeking out one that fits your specific needs.

Where Can I Get a Virtual Card? 

Ready to ditch the plastic card for online purchases and adopt virtual cards? 

The first step is to find the right issuer. There are a handful of major credit card issuers that offer virtual cards to individuals, so start with the companies you’re already familiar with and explore the options out there. 

If you’re a business owner, the ScaleFactor Visa card offers benefits that were designed for you, like no annual fee and 1% cash back. Better yet, you can issue virtual cards right from the mobile app, take and upload photos of receipts, and watch the impact spending has on your books in real time.  

Want to learn more about the ScaleFactor Card? Talk with a representative today.

Put your accounting on autopilot.

Scalefactor dashboard screenshot