Virtual card: what it is, types, how it works

A virtual card is an electronic analogue of a bank card designed for cashless payments. It has no physical form and exists only in digital form, but includes standard details: number, expiry date and CVV code. Such cards are issued by banks and payment services and can be used to pay for goods and services.

Initially, virtual cards were created primarily for online payments — purchases in online stores, ticket reservations, subscription payments, and other remote transactions. However, with the development of technology, they began to be used in offline environments as well. Modern virtual cards can be added to a mobile wallet (such as Google Pay or Apple Pay) and used for contactless payments in regular stores via the NFC module of a smartphone or smartwatch.

How a virtual card works

The mechanism of a virtual card is based on the same principles as a regular bank card. After issuance, the card receives unique details that can be used for payments on the Internet or at points of sale that support contactless payments. Issuance is carried out online — through a mobile application or the bank's web interface.

The card can be linked to a bank account or function as a prepaid card with the option of replenishment. It is suitable for both one-time transactions and regular payments. When paying in a store, a smartphone with the card added is brought close to an NFC terminal, and the transaction is confirmed as a regular contactless payment.

• The card is generated instantly and is available immediately after issuance.
• Suitable for both online and offline payments with NFC.
• It can be used in mobile wallets: Google Pay, Apple Pay, and similar services.
• It may have a limited validity period and transaction limits.
• Security is ensured by data encryption and a confirmation system.

Main types of virtual cards

There are several types of virtual cards, differing in purpose, method of replenishment, validity period, and level of control. This allows users to choose the best option depending on their tasks and preferences. The most common types are listed below.

By purpose

The type of card directly depends on the purpose of its use. Some are suitable for everyday payments, others for specific tasks, such as paying for subscriptions or protecting one-time purchases.

• For online purchases — used for payments in online stores.
• For subscriptions — suitable for regular payments for digital services.
• Anonymous — do not require identity verification, increase confidentiality.
• For international payments — support multiple currencies and international transfers.

By validity period

Virtual cards can be permanent or temporary. This affects the level of security and ease of use.

• Permanent — valid for one to several years, suitable for regular spending.
• Temporary — issued for a limited period, often used for one-time payments.

Advantages and limitations

Virtual cards have a number of advantages over traditional cards. However, there are certain limitations that should be considered when using them.

• High level of security — data can be easily hidden or changed if necessary.
• Fast issuance — the card is activated online in a few minutes.
• Expense control — limits and time frames can be set.
• No physical medium — the card itself cannot be lost or stolen.
• Do not support cash withdrawals — intended for cashless transactions only.
• Some online services do not accept cards without 3D Secure or the cardholder's address.

Thus, virtual cards are an effective tool for secure and convenient online payments. Thanks to the variety of types and functions, they are used both in everyday life and in business practice. Their use minimizes risks in online transactions and simplifies financial control.