While both physical and virtual payment cards function to provide the same services, there are many differences between the two in terms of practicality, convenience, and the ways to spend money.
Therefore, it is necessary to understand these differences in functionality before choosing a company card for your business or your general personal use.
This article will outline the differences in both types of payment cards, their benefits, and their shortcomings.
Physical payment cards
Physical debit or credit payment cards are regular plastic cards issued by banks to their customers to manage their company or personal spending.
This traditional purchase card features the cardholder's name, 16-digit card number, a magnetic strip, a PIN code and a CVC.
With a physical card, customers can withdraw cash from ATMs and make transactions from the point of sale and online transactions.
Virtual payment cards
Virtual debit or credit payment cards are accessed only through mobile phones.
They have all the properties of a physical card, including the 16-digit number, a CVC, expiry date, and a PIN code.
Virtual payment cards are an electronic payment solution that generates a unique number sequence with every purchase rather than a singular card number.
Online Vs. In-person Spending
While customers can use virtual and physical payment cards for business or personal spending, there is a difference in how you can use them to make payments.
For example, customers and companies can use virtual cards for online shopping, subscription management, and one-time purchases.
These options offer excellent security benefits, protecting your account from data breaches and fraud.
On the other hand, physical cards are primarily used for in-person spending.
However, they can also be used for online transactions by simply entering account information onto the website.
Although this makes physical cards more flexible, it does open up users to security risks.
These risks are due to the same number sequence with every purchase used in physical cards, making it relatively easier for hackers to infiltrate your account than virtual cards.
Security Risks & Protection
One of the biggest benefits of using a virtual debit or credit card for a company or personal online transactions is that it ensures safer online purchases.
Due to such cards being virtual, it is very difficult to duplicate them, neither is there any physical item to be stolen.
Additionally, most virtual cards are issued by trusted card providers such as Mastercard, which ensures that they go through the same fraud and security checks as a physical card would through its provider.
Lastly, if there is any risk, a virtual card can be temporarily frozen with a click of a button, while a physical card requires either physically going to the bank or calling them up to deal with the situation.
Branding & Design
Physical cards normally use co-branding, which involves several businesses featuring their brand on a payment card and sharing the space.
Although co-branding can have advantages such as positive brand association, it can result in legal agreements and profit-sharing complications.
On the other hand, private label cards, also known as white label cards, are store-brand cards intended to be used exclusively at a specific retailer.
This allows companies to use their own unique logos, designs, and colors onto their company cards without sharing space with other companies.
Virtual cards can be fully white-labeled, allowing them to be customized in accordance with the company's symbol, trademark, and color schemes.
Expense Control & Card Management
With physical payment cards, you would have to rely on your bank to make necessary changes to your account to set up spending limits and choice of currency, etc.
However, with virtual cards, you are in control of the settings.
This allows for an easier approval process that manages all expenses and payments,
Processing Company Payments
Using physical payment cards to process company payments can sometimes require a lot of paperwork and be inconvenient.
You would often have to rely on the accounts department to make payments which can waste time and cause delays.
However, virtual cards can be issued to multiple staff members who are responsible for making day-to-day payments.
Their managers can set up spending limits on each card which ensures a strict budget and better spending management.
Lastly, removing the middleman (the accounts department) allows a business to move faster alongside maintaining the company budget.
Accountability & Transparency
As discussed earlier, with virtual payment cards being assigned to staff members, they can also be assigned to each supplier, vendor, or retailer.
Due to this allocation and organization, it is extremely easy to track where your money is going and why.
Virtual cards automatically log transaction information into the company card management system.
Therefore, all records are carefully organized, processed, and accounted for, leaving no room for confusion or doubt.
Production & Set-up
Virtual and physical payment cards are produced differently.
Physical cards involve a much longer process as the material for the actual card needs to be produced and put together.
As a result, companies often have to pay for printing and delivery, which adds to their expenses.
However, since a virtual payment card is completely electronic, customers or companies can set it up within a couple of minutes through its mobile application.
Due to the traditional nature of physical cards, sometimes they do not come with additional innovative features that make managing finances and spending easy and convenient.
Virtual payment cards provide in-depth spending analytics, which is great for personal use and for finance and accounting departments within a company.
This provides a clear picture of the customer's spending, where costs need to be cut, and how budgets need to be reallocated.
After comparing and contrasting the characteristics of each payment card, there is a clear winner.
However, it would be best to keep in mind that some businesses and people prefer to keep it traditional and be less dependent on technologies and software.
This decides which payment platform is better for you and your company, completely dependent on your business's nature and personal preferences.
Are you looking into getting physical and virtual payments cards for your business and its employees?
Open a business account with Statrys and you'll get access to payment cards of all types on Day 1.
Download the Statrys mobile app and you'll be able to activate and manage your and your employee's cards from anywhere in the world (with WiFi).
What are virtual payment cards?
How do virtual payment cards work?
Can I assign virtual payment cards to my staff members?