Transactions made with virtual cards are on track to more than triple in the next five years. Digital cards are expected to process $5 trillion in transactions by 2025, according to a new report from Juniper Research.
This year, virtual card transactions are projected to reach $1.6 trillion.
Juniper’s report, titled “Virtual Cards: Consumer & Business Adoption, Competitive Analysis & Market Size 2020-2025,” reveals that B2B virtual cards will account for 80% of global digital transactions.
Virtual cards are issued on a temporary basis. They’re basically just random digital card numbers that can replace the user’s core or regular payment details for various e-commerce transactions.
Juniper confirmed that there’s been a decline in travel industry business revenues, due to the COVID-19 outbreak. The research company says that it’s now expecting about a 4% drop in travel-related spend levels this year (which doesn’t seem accurate as there should be a much bigger decline than this).
Juniper claims that there will be a projected 11% increase in the total number of transactions during this period. The rise in usage may be attributed to companies needing to authorize remote spending, Juniper said.
Juniper noted that it’s now expecting just 3% of businesses will be using virtual cards, because of their relatively high processing fees.
James Moar, the research report’s author, stated:
“Virtual cards often require additional software to use, which the average e-commerce user is not going to take the time to set up for mostly unseen benefits.”
“The technology needs to become more automatic, and allow more features, if it is ever going to gain traction beyond a few specific products in the consumer market.”
Most consumers might not be willing to use virtual cards. Only 20% of consumers are expected to use them by 2025 (assuming no improvements are made).
Juniper reported in June 2020 that financial service providers and regulators are increasingly focusing on enabling and supporting instant payments.
A study published by Juniper Research earlier this year claims that by 2024, the number of digital banking customers will surpass 3.6 billion, which would be a significant 54% increase from the current 2.4 billion users in 2020.