The key distinction between virtual and physical cards is that virtual cards only exist in digital format.
Physical cards are widely accepted both online and offline, while virtual cards may have limitations in physical stores.
Physical cards are susceptible to physical theft and skimming, and they are also at risk of cyberattacks when used online. In contrast, virtual cards are only vulnerable to cyber threats.
While both physical and virtual payment cards serve the same purpose of enabling payments, there are many differences between the two in terms of practicality, convenience, and security.
Understanding these differences before choosing a card for personal or corporate use can help you decide whether you need a physical card or a virtual card.
This article will compare virtual cards versus physical cards, covering the key benefits, potential weaknesses, and risks associated with each option.
By the end of the article, you should be able to decide which option to go for. Let’s take a look.
What Is a Virtual Card?
Virtual debit cards and virtual credit cards are payment cards exclusively stored and accessed through mobile phones. They can either serve as a digital version of your physical card or function independently as a standalone virtual card.
They have almost all the properties of a physical card, including the 16-digit number, a CVC or CVV code, an expiration date, and a PIN code.
Virtual cards are ideal for online shopping and managing recurring payments. Some physical stores may accept virtual cards, but it's crucial to note that not all establishments support them.
🔎 Tip: For a complete understanding of virtual credit cards, read our dedicated article on what is a virtual card.
Key Benefits of Virtual Cards
- Tailored control: Virtual credit cards offer easy customization through dedicated apps. You can track and control credit card payments, set schedules, limit spending, and freeze or disable cards easily.
- Enhanced security: With no sensitive information displayed on the cards itself, the risk of unauthorized access or misuse is minimized. Plus, some virtual cards can generate one-time-use codes for a single purchase, so your information is not exposed to multiple sites.
Key Drawback of Virtual Cards
- Not widely accepted: The primary drawback of virtual cards is their limited acceptance. Some merchants and ATMs may not accept virtual cards. Their usage might be less practical for in-person transactions where physical cards are typically preferred.
🔎 Tip: Explore more about how virtual cards can benefit you.
What Is a Physical Card?
Physical payment cards are regular plastic debit cards or credit cards issued by banks or financial institutions to their customers to manage their personal or business spending.
This traditional purchase card features the cardholder's name, a 16-digit card number, a magnetic strip, a PIN code, an expiration date, the cardholder's name, and a CVV (Card Verification Value) or CVC (Card Verification Code). The information is often written on the cards.
Physical cards are well-suited for point-of-sale transactions and withdrawing cash from ATMs. They can also be used for shopping online, but the process involves entering credit card details manually, potentially posing security risks.
💡 Tip: The CVV or CVC, a security code on credit and debit cards, is essentially the same with different names. Visa uses CVV, and Mastercard® uses CVC.
Key Benefits of Physical Cards
- Widespread acceptance: Physical debit and credit cards are widely accepted in most stores and ATMs. Every place that takes cards will take a physical card, which may not always be the case for virtual cards.
- No need to rely on your phone's functions: You can still make purchases even if your phone isn't working or its battery runs out. Moreover, physical cards are more convenient for customers without smartphones.
Key Drawbacks of Physical Cards
- Risk of loss or theft: Physical cards have a higher chance of being lost or stolen due to their tangible nature.
- Configuration and customization limitations: Physical cards are not as flexible as virtual cards in terms of customization, such as managing subscriptions or applying rules for restricted use.
Key Differences Between Physical And Virtual Cards
|Accessed only through online channels, namely mobile application
|Physical plastic or metal card in your wallet
It can be used at some selected stores.
It can be used online using the card number, CCV and expiry dates.
|Main security risks
|Cyberattacks, like hacking, phishing, and malware
|Physical theft, data breaches, and skimming.
Subject to cyber attack when used online to purchase goods or services..
|Main security protection
|• Distinctive one-time-use codes exclusive to each transaction
• Fraud monitoring
|• EMC chip
• Fraud monitoring
|More flexible user control
|Quick, online setup through mobile application
|Longer set up involving material production, printing, and delivery
|Easy tracking and organized online records.
|Limited tracking; may require manual record-keeping
Type of Spending: Online Vs. In-person
Virtual debit and credit cards find their frequent usage in online shopping and subscription handling.
What makes them more suitable for online purchases is the provision of disposable unique codes or card numbers in place of the actual virtual card number. This way, the real card numbers are never exposed or shared with the merchant, minimizing the impact of a data breach.
For example, Revolut's single-use virtual card regenerates a new and unique number after each online purchase, which means merchants never receive the permanent card number.
However, virtual cards may not be as suitable for in-store spending since some places may not accept them. Depending on your virtual debit card or virtual credit card terms, you may not be able to use a virtual card to withdraw cash from ATMs as well.
In contrast, physical cards are primarily designed for in-person transactions. While they can be used online by entering card details on a website, this exposes sensitive information like your credit card number and security code to online platforms, risking security.
🔎 Tip: If your virtual card is linked to an online bank and you're seeking to access cash, explore how to withdraw cash from your online bank account.
Security Risks & Protection
Virtual cards eliminate the risk of skimming – where thieves use small devices to clone card data from point-of-sale terminals or ATMs– since they lack a physical form. Instead, their main concern lies in cyber risks like attacks, hacking, phishing, and malware.
Despite these risks, they provide strong security. Notably, many virtual cards can generate unique disposable codes or card numbers valid for a single transaction rather than using an actual card number. Some cards also let you set expiration dates. This ensures that even in case of data breaches, no sensitive information is leaked.
Moreover, they undergo the same fraud and security checks as physical cards from their issuers.
Physical cards are exposed to risks like physical theft and skimming during transactions. They're also vulnerable to cyberattacks when used online.
Their main protection measures include EMV chips, which generate unique codes for point-of-sale transactions, and active fraud monitoring with alerts triggered for suspicious activities such as large purchases or transactions in unfamiliar locations.
💡 Tip: Linking cards to digital wallets like Google Pay and Apple Pay can enhance security as they use tokenization to keep your card information hidden.
Expense Control & Card Management
With virtual cards, you are in greater control of the settings. You can manage your subscriptions, budgeting, daily and monthly spending limits, payment types, payment date ranges, merchant types, and more using the apps where you keep your virtual cards.
In many cases, you can also freeze or deactivate the cards directly within its apps.
Nowadays, numerous physical cards also offer online customization options, allowing users to set spending limits and tweak certain settings. Nevertheless, the extent of customization available online is typically not as comprehensive as those offered by virtual cards.
Moreover, when it comes to freezing or closing the card, it's usually still necessary to contact the card issuer directly.
Processing Company Payments
Many businesses have multiple departments that need to make regular payments to the same vendor for various expenses like suppliers, software subscriptions, space rentals, and more.
Virtual payment cards can offer significant advantages. They can be configured to function exclusively with a specific vendor or authorized for specific purposes and limits only.
Assigning virtual payment cards to employees as corporate cards is also quick and flexible, allowing managers to set spending limits, restrict usage, and monitor expenses in real-time.
Using physical payment cards to process company payments, on the other hand, often involves paperwork and reliance on the accounts department.
Virtual cards offer simpler card account management compared to physical ones.
With virtual payment cards being assigned to staff members or linked to specific suppliers, tracking business purchases becomes more convenient.
Many virtual cards can also be integrated with other systems, such as accounting software or automatically logging transaction information into the company card management system.
Production & Set-up
Virtual and physical payment cards are produced differently.
Since virtual cards are purely electronic, customers or companies can set them up quickly, usually within a few minutes, through their web or mobile applications.
In contrast, physical cards involve a longer process because the actual card material has to be made and assembled. This leads to companies paying for printing and delivery, adding to their expenses.
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.
On the other hand, due to the traditional nature of physical cards, they may lack additional innovative features that simplify the management of finances and spending.
Virtual Card Vs Physical Card
Ultimately, choosing between virtual and physical cards depends on payment habits and preferences.
Virtual cards are ideal for online purchases, offering enhanced security and privacy. However, acceptance may not be as universal, particularly in physical stores and ATMs.
On the flip side, physical cards are reliable for in-person transactions and cash withdrawals from ATMs but pose risks like loss and theft, as well as lacking the customization of virtual counterparts.
A commonly effective approach is using both – combining the strengths of each and using each method where it's most suitable.
For instance, use physical cards when traveling for broader acceptance and travel benefits such as discounted travel bookings, airline miles, and access to lounges.
Conversely, reserve virtual cards for online purchasing and as employee payment tools to benefit from added security, specific spending limits, quick issuance, and streamlined expense management.
If you are looking into getting physical and virtual payment cards for your business and employees, consider opening a business account with Statrys and applying for physical and virtual payment cards designed for business.
What are 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.
How do virtual payment cards work?
Can I assign virtual payment cards to my staff members?