Can virtual cards improve fintech?
Fintech has become a hot topic due to its potential to revolutionize how we handle our finances. One technology that is gaining traction circles is virtual cards. Let's look at their benefits.
Virtual cards or virtual account numbers are disposable card details. The unique 16-digit card number, expiry date, and CVV number can be generated directly from your account with some products and apps with others.
As digital payment tools, they work the same way as traditional or physical credit or debit cards. However, they are purely online products, ordered and delivered electronically or digitally in seconds. In addition, the virtual card is assigned to a payment source, allowing payments to be made through the virtual card. They do not have magnetic stripes or chips on them- so they cannot be used for chip and pin payments using card readers or cash withdrawals from conventional ATMs.
Virtual cards exist entirely online. Instead of being issued by banks in physical form, printing and mailing them, which may take few weeks, virtual cards are issued in seconds, and stored electronically in your device or wallet app. Even without a traditional bank account, debit or credit card consumers can buy, sell, and transact digitally.
Benefits for consumers and businesses.
Virtual cards offer numerous advantages, including improved convenience, enhanced security, and expanded access to services. This makes them more convenient than traditional plastic cards since they can be used anywhere with a few taps. They provide greater security since they are not linked to physical locations like bank branches or ATMs and cannot be stolen from your wallet like a physical card.
Virtual cards also make shopping more accessible to make purchases online without entering your payment information and help you mask your identity when making online purchases.
Credit card fraud, theft, and misuse affect millions each year. Virtual credit cards are one viable solution as they offer greater fraud prevention. The card number of a virtual card is randomly generated and unique while using a third-party payment source means that if a card's details are stolen, the perpetrators do not get access to the user's bank accounts.
They give users greater control over their finances to quickly review all transactions with a card in real time and adjust as needed without waiting for bank statements. In addition, it allows users to access services from overseas vendors that might not accept traditional payment methods due to currency conversion fees or other complexities associated with international payments.
From a business perspective, virtual card solutions offer financial institutions numerous advantages, including reduced costs associated with issuing physical plastic cards and improved customer satisfaction due to quicker response times when customers need assistance with transactions or other inquiries related to their accounts.
Even for issuing supplementary or add-on cards to family members, for lending or borrowing from a friend, is easier. For employees to manage their expenses or budgets, virtual cards make it easy as issuing or sharing separate cards can be done in seconds, and spending can be tracked and operated by the individual and business directly.
Virtual card solutions also enable financial institutions to meet changing customer needs more quickly by providing new products or services faster than would be possible through traditional means since no additional infrastructure needs to be built out for them to operate effectively.
They can reduce fraud losses since all transactions made using these products are tracked digitally, allowing them to detect fraudulent activity almost immediately and take appropriate measures against it before any damage occurs.
Can virtual cards improve fintech?
Since virtual cards can be linked to billions of digital wallets (such as Apple Pay, Google Pay, or similar ones), which are installed on smartphones to access e-commerce services and subscription-based products but do not have access to debit or credit cards. This can bring to the fold many unbanked or underbanked populations in rapidly developing economies to buy and sell quickly without needing a bank account, debit, or credit card.
Virtual cards are expected to increase consumer adoption of contactless payments. Even for businesses, it lets them offer more accessible payment options during checkout or at the POS.
What's the future of virtual cards?
Juniper Research forecasts that the global number of virtual card transactions will exceed 121 billion by 2027, increasing from 28 billion in 2022 - a staggering growth of 340% over the forecast period. Given this situation, a large growth in virtual card usage is expected over the next five years in both B2B and B2C markets.
Virtual cards can revolutionize fintech and bring numerous benefits to consumers and businesses. From increased convenience for customers when making purchases online or abroad to improved fraud detection capabilities for financial institutions, there's no doubt this technology is here to stay.
So, if you're looking for ways to enhance your banking experience while keeping your finances secure - consider digital banking solutions, with trustworthy providers, like Bankingly. Let´s talk!