Virtual Cards: The Upgrade Digital Payments Have Been Waiting For 

by | May 26, 2023 | Spending

Credit and debit cards have been the preferred payment methods for Americans for decades. But as more of our world moves to the digital space, the analog methods of plastic are showing their age. The digital payments industry has grown substantially in the past decade. According to a recent SkyQuest report, mobile wallets worldwide grew from fewer than 2 million in 2016 to 2.8 billion in 2020. That’s incredible growth, showing the popularity and user-friendliness of mobile wallets.  

One of the newest entries into the digital payments space is virtual cards. Unlike the digital copies of your physical cards currently saved on your phone, virtual cards don’t have a plastic counterpart. They only exist online.  

Let’s dig in to why you may want to add a virtual card to the list of your payment options. 

Fraud Protection with Virtual Cards 

Along with conveniences of current digital payment methods, virtual cards also come with some additional protection against fraud. The Federal Trade Commission reported that in 2021, for credit cards and debit cards combined, there were over 157,000 fraud reports with over $321 million in losses. With the prevalence of fraud, it’s a smart move to ensure you have multiple payment options in case one card is ever compromised. 

Report from the Federal Trade Commission showing the number of reports and total loss from fraud across multiple payment methods.

Since virtual cards have no physical presence, you can’t lose or misplace them. They can be stored behind biometric data on your phone (like a fingerprint or face ID), making it harder for potential thieves to authorize payments or alter settings. Users have more control over their spending through extensive mobile app settings. They can select additional security protections, set spending limits, and even limit what vendors a card is (or is not) authorized for.  

But the biggest benefit of a virtual card is that it can be replaced in minutes. Aside from the financial damage, the next biggest problem consumers face when dealing with fraud is the inconvenience. Physical cards can easily be canceled, but users then have to wait for a replacement to arrive in the mail. This can leave people with limited access to funds for days, or it means they must take a trip to a physical bank branch to withdraw cash. But with a virtual card, customers receive a reissued card in minutes and can safely access their funds.

A Safe Separation of Transactions  

Do you ever go through your bank statement and not recall whether you made a purchase in store or online with the same retailer? (Target, we’re looking at you). Adding a virtual card in conjunction with a physical one can make finances a little easier by enabling users to track their spending better. For example, virtual cards could be used for online purchases, while physical cards are reserved for in-person transactions.  

When paired with card functions through your banking app, users can get even more control and security with their spending. Physical cards can remain locked until users need to make a purchase in the store, eliminating the risk of someone using it for illegal transactions. Virtual cards can be set with merchant-specific spending limits to temper overspending or prevent automatic renewals for yet another subscription box. 

Multiple Cards = Built In Backup 

Having access to both cards also provides a kind of back door to funds in the event that one card is compromised, never leaving you hanging. For example, if your virtual card becomes compromised, your physical card is still safe to use to get gas or groceries. If you lose your physical card, so long as a merchant accepts digital wallet payments like Apple Pay or Google Pay, you can still make in-person payments with your virtual card while waiting for a physical replacement. You’re not left hoping that you have some cash stored somewhere to pay for dinner! 

However you want to arrange it, having a separate virtual card and a physical card makes it easier to manage and protect your money in today’s hybrid shopping environment. 

Online Bank Account with Instant Debit Card 

Wondering how you can get set up with a virtual and physical debit card? Milli has you covered. We’re a mobile bank, and when you sign up for a Milli account, you’ll get an instant virtual debit card and a physical one in the mail shortly after. You can put the virtual debit card vs physical debit card spending and tracking guidance to use to manage your finances however you see fit. Plus, get all of Milli’s other helpful features like automated savings tools, a competitive APY, and customizable Jars

Download the Milli app from the App Store or Google Play and sign up today!

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