Virtual cards have steadily grown in popularity in recent years. They’re a solution to the changing needs of businesses, particularly those concerned with remote work, online purchasing, and digital security. While traditional physical cards are still functional, they often have limitations that don’t align with the dynamic nature of contemporary companies. As a payment method, virtual cards offer flexibility and strong security, and they have functionalities that can redefine expense management and vendor payments.

The worldwide market for virtual cards is expected to increase in value from nearly $23 billion in 2025 to almost $113 billion by 2033. Below, we’ll explore what businesses should know about virtual cards, including how they work and how to choose a provider.

What’s in this article?

• What is a virtual card?
  
• What are virtual cards used for?
  
• How do virtual cards work?
  
• Are virtual cards safe?
  
• Benefits and drawbacks of virtual cards
  
• How to choose a virtual credit card provider
  
• How to get a virtual card for your business
  
• How Stripe Issuing can help
  
• FAQs about virtual cards
  

What is a virtual card?

A virtual card is a digital version of a physical card, such as a credit or debit card. They’re used primarily for online transactions. Like a traditional card, a virtual card has a card number, expiration date, and security code—usually a card verification value (CVV) or card verification code (CVC). These details are generated electronically.

What are virtual cards used for?

Virtual cards are typically used for online purchases or transactions where the physical card isn’t required to be present. They’ve gained significant traction recently, largely because of their adaptability and security features. Here’s how businesses commonly use them:

• Online purchases: As a digital-first payment method, virtual cards are preferred for ecommerce transactions. They offer a way to transact without revealing primary card or bank details, reducing exposure to potential fraud.

• Subscription management: Businesses often opt for virtual cards when they sign up for software or online services. If a service is no longer required, the virtual card can be deactivated, preventing further charges.

• Expense management: Companies often use virtual cards for expense management, including employee travel. They can issue a virtual card to an employee for a specific purchase, which provides another layer of control and oversight over spending.

• Vendor payments: Businesses can generate virtual cards with set limits for vendors, making it easier to manage and track payments.

• Single-use scenarios: For transactions where added security is desired, businesses can generate single-use virtual cards. After the transaction, the card details become obsolete, making any data breach less impactful.

• Employee expenditures: Instead of issuing physical corporate cards, some businesses prefer giving employees virtual cards with predefined limits for business-related purchases.

• Ad campaigns: When they run online advertising campaigns, businesses might use virtual cards to allocate budgets effectively. If a campaign’s budget is exhausted, the card prevents overspending.

• Metered billing: For services that bill based on usage, such as cloud hosting, virtual cards can help businesses manage unpredictable expenses by setting a limit on possible charges.

How do virtual cards work?

Virtual cards give companies control over employee and vendor spending at scale. Here’s the basic process:

• Issuance: A company's bank or spend management platform generates virtual card numbers linked to a central business account, often issuing dozens or hundreds at once to different employees, teams, or vendors.

• Custom controls: Admins can set spending limits, restrict cards to specific vendors or categories (e.g., software subscriptions, travel), and choose whether a card is reusable or single-use for one-off payments.

• Assignment: Cards can be issued to individual employees, departments, or specific projects, making it easier to track who's spending what without handing out physical company cards.

• Transaction routing: Purchases are processed like normal card payments, with charges automatically routed to the business's central account and categorized for accounting.

• Real-time tracking and reconciliation: Finance teams get visibility into transactions as they happen, which usually syncs with accounting software to speed up expense reporting and minimize manual reconciliation.

• Expiration or revocation: Cards can be set to expire automatically or be shut off instantly if an employee leaves, a vendor relationship ends, or fraud is suspected.

Are virtual cards safe?

Virtual cards offer several safety features that address common vulnerabilities associated with traditional card transactions. Here’s a closer look:

• Limited exposure: Because businesses often create virtual cards for specific purposes, the primary card or bank details aren’t exposed during transactions. This reduces the risk of data theft.

• Single-use cards: Many virtual cards are generated for one-time use. After the intended transaction, the card details become invalid, rendering them useless to potential fraudulent actors.

• Spending controls: Users can set specific limits on virtual cards, in terms of the total amount, validity period, or merchant category. This offers another layer of control and helps decrease the potential damage from unauthorized transactions.

• Business-specific cards: Some virtual cards can be locked to a particular business. Even if the card details are compromised, they won’t work elsewhere.

• Immediate issuance and termination: Virtual cards can be generated instantly and terminated at a moment’s notice. If there’s any suspicion of a breach or misuse, the card can be deactivated promptly.

• Real-time alerts: Many platforms that offer virtual cards provide real-time notifications for every transaction, making it easier to spot and report unauthorized activities.

• No physical risk: Without a tangible card, there’s no risk of losing it or having it stolen conventionally.

Although virtual cards have robust safety mechanisms, no payment method is immune to risk. Best practices (e.g., using trusted networks, keeping software up-to-date, regularly monitoring transaction history) can increase the safety of virtual cards.

Benefits and drawbacks of virtual cards

Virtual cards are a solution to a variety of financial challenges businesses commonly face, but there are still downsides when you use this payment method. Before you decide whether virtual cards are a good option for your business, weigh their benefits against their drawbacks.

Benefits of virtual cards

• Risk mitigation: Virtual cards, especially single-use types, significantly reduce the chance of fraud. Once they’re used, these card details become invalid. That leaves practically no opportunity for unauthorized transactions. For businesses, this reduces the need for damage control related to financial breaches.

• Budget control: Businesses can issue virtual cards with predefined limits. For instance, if a department is allocated a specific budget for software purchases, it can create a virtual card with that exact limit, preventing overspending.

• Instant issuance: Waiting for physical cards can cause operational delays, especially when immediate transactions are required. Virtual cards eliminate this wait, which is beneficial in fast-paced business environments.

• Custom use: Users can set virtual cards to work with specific businesses only, minimizing misuse or misallocation of funds.

• Easy reconciliation: For accounting teams, virtual cards can increase efficiency. A business can associate each card with specific projects or departments. As transactions occur, they’re automatically categorized, simplifying end-of-month reconciliation processes.

• Environmental impact: With no plastic production or delivery involved, virtual cards represent a more sustainable choice and align with many corporate social responsibility goals.

• Security: One of the primary advantages of virtual cards is enhanced payment security. Some virtual cards are designed for one-time use. So once they’ve been used for a transaction, they become invalid. This reduces the risk of unauthorized or fraudulent use. Other virtual cards might have set limits or can be locked to a specific business.

• Flexibility: Depending on the issuer, a virtual card can be linked to a traditional bank account or credit line or it might be preloaded with funds. Virtual cards can also be configured with spending controls, such as limits on the transaction amount, total spend, date ranges, or merchant categories.

Drawbacks of virtual cards

• Not universally accepted: Despite the growing popularity of virtual cards, some businesses don’t accept them and require a physical card to be present.

• Overreliance on technology: While the digital nature of virtual cards offers convenience, it also means businesses are dependent on the issuing platforms. Any technical glitches, outages, or cyberattacks could disrupt operations.

• Learning curve: Introducing virtual cards into a business might require training for employees, especially those who aren’t tech-savvy. This could lead to initial resistance or mistakes.

• Integration challenges: Not all accounting or expense management systems support virtual cards, potentially complicating the integration process. This could necessitate additional software investments or manual work-arounds.

• Loss of physical card benefits: Some physical corporate cards come with perks such as airport lounge access and travel insurance. Switching entirely to a virtual format might mean sacrificing these benefits.

How to choose a virtual credit card provider

Not all virtual card providers offer the same level of functionality so it's worth evaluating a few factors before you commit to one for your business:

• Card network compatibility: Providers typically issue cards through networks like Visa or Mastercard. Before you sign up, check that your regular vendors and suppliers accept payments on that network to avoid friction later.

• Integration with existing tools: Look at how well a provider connects with the accounting, expense, or treasury software your company already uses. A strong integration can save your finance team hours of manual data entry and reconciliation each month.

• Spending controls and flexibility: Compare how granular each provider's controls are. You'll want the ability to cap spending amounts, limit purchases to certain categories or vendors, and set usage frequency so cards align with your internal policies.

• Reporting and visibility: Some providers offer more robust real-time dashboards and analytics than others. Better visibility into transactions as they happen makes it easier to catch unusual activity and keep budgets on track.

• Pricing and fees: Understand how each provider charges—whether through subscription fees, per-card costs, or transaction fees—and weigh that against the features you need.

How to get a virtual card for your business

Acquiring a virtual card for your business can be straightforward, although the process might vary slightly depending on the provider. Here are the general steps most businesses can follow:

• Research providers: A variety of virtual card services are available, each with unique features, fee structures, and integrations. You should take time to understand which service aligns best with your business needs.

• Set up your account: After you select a provider, you’ll typically need to set up a business account. This often requires providing details about your business, including its legal name, address, and tax identification number.

• Complete verification: Most providers will conduct a verification process to authenticate the legitimacy of your business. This can involve submitting documentation such as business licenses, bank statements, and tax returns.

• Set card controls: Once your business is verified, you can customize your virtual card settings. This includes setting spending limits, determining which employees have access, and specifying merchant categories if necessary.

• Integrate with accounting software: Many virtual card providers offer integrations with popular accounting and expense management tools. Connecting these can simplify expense tracking and reconciliation.

• Issue cards: After configuration, you can begin issuing virtual cards to relevant employees or departments. Most platforms enable quick generation of these cards, granting immediate access.

• Handle ongoing management: You’ll want to regularly review transactions, adjust card settings as needed, and monitor for suspicious activity. Most platforms provide real-time insight and reports to aid in this oversight.

Virtual cards aren’t just a trend; they’re a tool businesses can use to increase security and improve the transaction experience. With virtual cards, businesses can monitor their expenses more closely and adjust quickly based on real-time data.

How Stripe Issuing can help

Stripe Issuing allows you to easily create, distribute, and manage custom cards—generating new revenue streams and enhancing your customer experience.

Issuing can help you:

• Launch new card products: Quickly create physical, virtual, or tokenized cards customized to your specific business needs—whether that’s expense cards, rewards, or something else.

• Improve operational efficiency: Automate card issuance and management through Stripe’s application programming interfaces (APIs), reducing the complexity of working with multiple card issuers.

• Enhance customer experience: Offer your customers a branded card experience that integrates seamlessly with your existing products and services.

• Gain visibility and control: Access detailed transaction data and controls to monitor card usage, set spending limits, and suspend cards when needed.

• Expand revenue opportunities: Monetize your card programs by collecting shared interchange revenue or by offering value-added services.

• Access Stripe’s expertise: Benefit from robust infrastructure and compliance support, influenced by Stripe’s experience powering card programs for leading companies.

Learn more about how Stripe Issuing can help you drive growth with custom card programs, or get started today.

FAQs about virtual cards

Here's what businesses commonly ask about using virtual cards for company spending.