Virtual cards, also known as temporary cards, are defined by the researchers at Juniper Research as “randomly generated and generally temporary card number linked to a payment account, used to process payments in lieu of genuine payment details.”
A virtual card is “a payment tool that has the same attributes as a traditional card, with key components including a 16-digit card number, an expiry date and a CVV number.”
As explained in a report by Juniper Research, virtual cards can “exist as a digitized version of a physical card, or a card that only exists in its virtual from and is stored in digital wallets.”
The team at Juniper Research further noted that the “clear distinctive feature that separates virtual cards from physical cards is the enhanced layer of security.”
For example, virtual cards allow users “to make purchases online without having to declare any bank details from their payment source.”
Therefore, core bank details “cannot be stolen, as virtual cards generally provide a unique card number for each payment.” Furthermore, due to “their digital nature, virtual cards are less likely to be stolen or lost.”
Although the breadth of applications and popularity of virtual cards are expanding, some sectors of the economy “have yet to completely reap the rewards created by virtual cards.”
Virtual cards are “common in fleet and mobility management, B2B travel expenses, purchases, procurement, marketing and advertising campaigns, and there are potential areas in financial markets and the accounts payable industry.”
While overall more popular in the business sector, virtual cards or the consumer market
have been “gaining traction in the last few years, with digital challenger banks creating
virtual cards tailored for wealth management and budgeting, family accounts and as
a fraud prevention strategy.” The consumer market “for virtual cards is expanding as a
fraud prevention strategy.”
Juniper Research also mentioned that “over the forecast period the total volume of virtual card transactions “will reach 175 billion by 2028, rising from 36 billion in 2023. Growing by a significant 388%, the market will be accelerated by the adoption of API virtual card issuing platforms.”
The report identified easy-to-use API (Application Programming Interface) platforms, “that allow businesses to establish a virtual card program that they can deploy easily and scale alongside their needs, as a key development driving virtual card growth.”
Another key success factor identified “by the research was the readiness of a virtual card platform to easily integrate within an organization’s own software and established infrastructure.”
For example, procurement-focused virtual cards need “to integrate with accounts payable software in order to automate renewals, log payments and generate digital receipts.”
The report from Juniper Research concluded that virtual card vendors “must therefore “integrate with a wide range of third-party software systems across key verticals of interest, in order to maximise their success.”