Virtual Cards vs. Physical Cards: A Business Owner’s Guide

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The universe of cash and checks has transformed into the universe of bits and bytes over the past two decades. When it comes to business payments today, there are two main types of cards: virtual cards and physical cards. Both have unique benefits and drawbacks that business owners should know about before sending payments over the Information superhighway or on the card swipe machine.

Virtual Cards Add an Extra Layer of Protection Against Identity Theft

Virtual credit cards use a unique credit card number for each purchase, meaning that the financial data connected to your account stays safe even if a transaction falls prey to hackers. Using a virtual card from a provider like Divvy gives you more security and control over your vendor and client transactions that a physical card can’t replicate.

Virtual Cards Give You Instant Access

Since virtual cards are issued online, they are available immediately. Therefore, cardholders can use them as soon as funds become available. By contrast, physical cardholders won’t know their card number until they receive a card in the mail. Even then, the issue requires additional steps for activation.

Virtual Cards Are Less Likely to Be Lost or Stolen

The majority of cards that are lost or stolen are physical cards. Virtual cards, however, are only accessible through the virtual world, so there is no tangible card to lose or steal. Only the person with the virtual card number and security code can use it, which minimizes the chances of someone making unauthorized charges.

Virtual Cards Are Easily Branded or Customized

Businesses can brand virtual cards with the business name, logo, and information, making them a perfect marketing tool. Cardholders can also design cards to match the look of your company’s website, literature, or other promotional items. Typically this is an expensive process with physical cards due to printing costs.

Adding your branding is a more accessible and affordable feature for virtual cards.

Physical Cards May Offer Rewards or Cash-Back Programs

Many physical cards offer rewards or cash-back programs for spending a certain amount of money on the card each month. These perks can be an attractive feature for businesses who want to earn extra rewards from their card spending. Of course, these perks may be available for virtual cards as well.

Physical Cards Are Compatible with Point-of-Sale Systems

Businesses with a physical location can also use their cards as part of their point-of-sale system. Physical payment cards are compatible with many different types of POS systems. Since you cannot swipe virtual cards as credit or debit cards at the register, they might not always work with all POS systems.

Physical Cards Don’t Require Experience with Technology

Some people have trouble using new technology. If you have a customer base who might need assistance using a virtual card, it might be best to furnish them with a physical card instead. Physical cards are easier for this audience to use since they have used cards in the same way for years. However, in-store technology changes often, which means it will likely become easier to use virtual payment methods as time goes on.

Physical Cards Have ATM Privileges

Unlike virtual cards, most physical cards also come with ATM privileges, meaning cardholders can withdraw cash from any ATM. This accessibility can be a helpful feature for businesses that occasionally need to withdraw paper money from their account.

Wrapping Up

Understanding which type of card is best for your specific needs is vital. No matter which type of card you choose, make sure to familiarize yourself with the terms and conditions, so you know what to expect when using your card, whether it’s physical or virtual.

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