Physical vs virtual cards – Differences and all you need to know

Although physical and virtual payment cards both offer the same services, there are still glaring differences between them, especially in terms of convenience and practicality. Hence, if you are faced with choosing between any of these payment cards for your business, it is important for you to understand their functionality and differences. With the right information, you can objectively choose the more suitable option for your business or personal needs. So physical vs virtual cards; what are their differences, benefits, and shortcomings? We’ll walk you through every detail you should know in this article.  

What are physical payment cards?

Physical payment cards could either be debit or credit cards. Essentially, they are regular plastic cards printed out and issued by banks to their customers to handle their business or personal spending.

This conventional payment card usually features the cardholder’s name, a magnetic strip, a 16-digit card number, a CVC, and a PIN code. With a physical purchase card, customers of banks can easily withdraw money from ATMs and execute financial transactions from the point of sale. Also, these cards support online transactions (it could be domestic or international depending on the bank).

What are virtual payment cards?

Bitmama Virtual Card1
Bitmama Virtual Card

Virtual payment cards could either be debit or credit cards. Essentially, these kinds of cards are solely digital and accessible only via digital devices. Virtual cards have the same properties as regular physical cards, including a 16-digit number, an expiry date, a CVC, and a PIN code. Virtual payment cards are a digital payment solution that develops a distinctive number sequence with each purchase you make instead of a singular card number. Some of them possess random details not tied to your actual bank account. 

Why are virtual cards important for your business?

The major purpose of virtual payment cards is to make digital payments and purchasing much easier through a safer platform. Since these cards are linked to a card management system or payment management software, all the transactions executed by each virtual card are clearly documented and stored. So there is complete transparency. With this feature, it would be easy for you to track your employees’ expenses thereby reducing the overall expenditures.  

Additionally, with virtual cards, it is possible for you to restrict payments and make them solely for departmental work. By doing this, your employees won’t be at liberty to use the card for any other expenses aside from the ones concerning their department. You can use these cards to target specific goals such as marketing, ads, sales, and even software subscriptions.

Virtual cards can also be used to surpass online payment barriers and restrictions. For example, some domestic physical cards cannot transact in Dollars. Virtual cards, like that of Bitmama, allow you to make dollar payments, handling the currency conversion regardless of your location.

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How do virtual cards work?

Virtual cards generally function in any of these ways:

1. Virtual credit cards

Virtual credit cards make use of randomly generated numbers to make up for your normal account number. Also, virtual credit cards come with an expiration date and security code that will enable you to use the virtual payment card number just like your regular physical card whenever you buy something online or make a payment in an app. 

Essentially, the virtual credit card hides your actual card information, so that your sensitive card and account data doesn’t get shared. When you execute your transaction, you can deactivate your virtual card or just delete the card number from your regular account for extra security. This process doesn’t affect your overall card account.

If you find yourself in a situation where the virtual card number is compromised before you finish using it to make purchases, you can just alert your bank or the virtual card issuer about any fraudulent purchases. The compromised virtual credit card will then be canceled, thereby saving you the stress that occurs when a new number has to be issued for your actual bank card.

Bitmama, for example, offers virtual cards that are not tied to your actual bank account. This way, there is little risk of the card details being used to hack your account in case of a breach.

2. Virtual debit cards

Virtual debit cards are generally provided to customers as a temporary solution when you’re waiting for your bank to prepare your new card. These virtual cards may even use identical card numbers as your regular physical debit card. Basically, they are a way to access your card information before the physical payment card arrives. 

Physical vs virtual card: What are the differences?

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Although physical and virtual cards are payment cards for financial transactions, there are still some glaring differences between them. Below, we’ve highlighted the difference between both of these cards based on certain factors.

1. Online vs. in-person spending

While you can use both physical and virtual payment cards for your business or personal spending, there is a major difference in their usage.

For instance, you can use virtual cards for online shopping, one-time purchases, or even subscription management. This is because they offer outstanding security benefits, and can protect your real bank account from fraud and data breaches.

On the other hand, regular physical payment cards are mainly used for in-person spending. Nonetheless, you can still use them to execute online transactions by simply inputting your card details onto the website. 

Although this feature makes physical payment cards more flexible, it opens up its users to high security risks, since their card information will be online.

With your card information online, it becomes easier for hackers to penetrate your bank account and steal money. 

2. Branding & design

Physical cards generally make use of co-branding, which simply involves numerous businesses featuring their trademark on a purchase card and sharing the same space. Although co-branding has benefits, such as positive brand association, it may lead to legal agreements and profit-sharing difficulties.

On the other hand, private label payment cards, also called white label cards, are store-brand payment cards hoped to be used solely for a specific retailer. This permits businesses to use their own distinct logos, colors, and designs, on their business cards without the need to share space with any other business.

Virtual cards may be completely white-labeled, which allows them to be customized based on your business’s symbol, trademark, logo, and even color schemes.

3. Security risks & protection

One of the most significant benefits of making use of a virtual debit or credit card for your business or personal online transactions is that it guarantees safer online purchases.

Since virtual are solely digital, it is very hard to reproduce them. Also, it is very safe because there isn’t any physical item for thieves to steal.

Also, most virtual cards are printed and issued by trusted payment card providers such as Mastercard. This ensures that they pass through similar fraud and security inspections as a regular physical card would via its provider.

Lastly, it is possible for you to freeze your virtual card temporarily if there is any risk. This can be done with just the click of a button, unlike a physical card that requires you to either go to your bank physically or call them up to handle the situation.

4. Expense control & card management

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With physical purchase cards, you have to depend on your bank to make vital changes to your bank account, such as choice of currency or setting up spending limits. However, this is not the same for virtual cards, as you control the card settings. This permits a more comfortable transaction approval process that supervises all expenses and payments.

5. Production & set-up

Virtual and physical payment cards are created differently. While physical payment cards involve a much longer and more complicated process because the material for the real card has to be created and assembled, it is not the same for virtual cards because they are only in digital form.

6. Processing company payments

Using physical purchase cards to process your company’s payments may be often inconvenient and generally require a lot of paperwork. Generally, you may even have to depend on the accounts department to complete payments which may waste your time and cause unnecessary delays.

However, you can easily issue virtual cards to numerous staff members who are liable for executing day-to-day payments. Their departmental managers can put up spending limits on each virtual card which guarantees that employees transact within a strict budget, thereby leading to better spending management.

7. Accountability & transparency

As stated earlier, you can assign virtual payment cards to staff members to facilitate better financial management. In this same way, you can also allocate cards to each vendor, supplier, or retailer. Due to this distribution and excellent organization, it is very easy to track where the lump of your cash is going and why.

Since virtual cards automatically log all financial transaction information into a business’s card management system, it is very easy to track past transactions. Also, this means that all records are carefully categorized, processed, and accounted for, which leaves no room for doubt or confusion.

8. Additional features

Due to the conventional nature of physical payment cards, sometimes they may not come with extra innovative features that make it easier and more convenient to manage your finances. Virtual payment cards come with a variety of new and exciting added features.  

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Pros of using physical payment cards

How to use virtual cards to manage business expenses

Here are some major advantages of using physical payment cards:

1. Issued to requested workers; it results in better differentiation of payments.

2. It encourages online purchasing, in-store shopping as well as in-app purchases.

3. It is pocket-friendly.

4. Physical Cards can be used to pay for flights, hotels, and even transportation while you are on a business trip.

Cons of using physical payment cards

Here are some major disadvantages of using physical cards:

1. The likelihood of stealing and misplacing the card is high.

2. New cards have to be created again after the card’s expiration dates.

3. Needs to be physically carried around

4. Printing new physical payment cards for every worker is a very costly affair.

Pros of virtual payment cards

Here are some major advantages of using virtual cards:

1. Stress and hassle-free creation

2. Customer can create unlimited cards

3. Easy to supervise subscriptions as well as other vendor payouts.

4. Seamless reconciliation.

5. It supports FX transactions regardless of your location

Cons of virtual payment cards

Here are some major disadvantages of using virtual cards:

1. Every merchant vendor does not accept the virtual form of payment.

2. Easily accessible for every employee.

3. Difficult to trace the initiator for each transaction.

Are virtual cards more secure than physical cards?

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A virtual debit card that has your regular account number and an expiration date likely isn’t safer than a conventional physical card. The only advantage of this kind of card is that you may be less likely to misplace it or have it stolen by thieves. 

However, a virtual credit card that makes use of unique numbers instead of your normal card data has some possible security benefits. Since these cards are not linked to your regular bank accounts, there is no way for hackers to steal the money there.

Ultimately, which option is better for you and your business? A physical card or a virtual one? While physical cards are practically universally accepted whenever you want to go, you can’t use a virtual card to pay for services in some places. 

However, one of the major features of virtual cards that makes them better than physical cards is their flexibility. With virtual cards, it becomes very easy to manage the finances of your business because all expenses are recorded and can be limited. You can also transact beyond the restrictions of your local banks and make international payments.  Ultimately, deciding what payment card to use is solely a personal preference so it mainly depends on what you want. 

Bitmama virtual cards allow you to make online local and international payments with a single click. It is easy to set up and you can start using it right away. 

Get started by downloading the Bitmama app today.



Oct 18, 2023

10 mins read

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