12 mins read

Payment Automation

What is a Virtual Credit Card?

by Yooz the 10.12.2022

what is a virtual credit card

Adding another defense against cybercrime


In an era of seamless integration between accounting and technology, innovative digital payment solutions have emerged as tools to strengthen transaction security. Unlike the traditional credit card, virtual credit cards exist solely in electronic form, safeguarding your credit card details and minimizing the risk of credit card fraud during transactions.


So exactly what is a virtual credit card?


Essentially, a virtual credit card is a digital version of a physical credit card number, designed for both temporary and extended use when shopping online. Similar to its physical card counterpart, a virtual credit card comes equipped with a 16-digit credit card number, an expiration date, and a security code. This makes it a secure and convenient alternative for online shopping.


Let's explore the idea of payment automation further.


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Virtual Credit Cards for Individuals vs Businesses


Virtual credit cards cater to both consumers and businesses, serving as a protective barrier against the ever more inventive cyber thieves and evolving cyber threats. Why? Utilizing a virtual credit card shields your physical credit card information from potential compromise when making transactions online or over the phone. The use of short-lived, frequently changing, and randomly generated virtual card numbers - known as "tokens" - adds an extra layer of security to the process.


In the business domain, Business-to-Business (B2B) credit cards offer an enhanced level of security and control. These virtual cards provide businesses with the ability to set customizable spending limits and restrictions, ensuring precise control over expenditures.


Furthermore, the ability to integrate the virtual card with accounting systems facilitates seamless tracking and streamlined financial workflows. This further strengthens the financial infrastructure of a company in the face of potential cyber threats.


Benefits of a Virtual Card


Consumer Benefits


Reinforced Security:


A virtual credit card provides an additional layer of protection from fraud, safeguarding your long-term payments and personal information. The unique temporary account number associated with the virtual card is not linked with your full account number or actual identify, minimizing the risk of exploitation even if there is a data breach.


Transparent Transactions and Refunds:


As with any new payment method, there are obviously going to be worries about whether transactions will be visible and questions over whether refunds work in the same way. A virtual credit card seamlessly integrates with your physical credit card, ensuring that all transactions are traceable. The refund process mirrors that of traditional (physical) cards, alleviating any fear about payment visibility or refund procedures.


Customizable Flexibility:


You can decide whether to have a temporary or permanent virtual card, as some providers allow you to choose the length of time your card is valid. Tokens can be temporary or permanent. It is a useful feature for shared credit card accounts or if you elect to repeatedly use it for a subscription, such as Netflix or business journals.


Business Benefits


Process Streamlining:


Virtual credit cards significantly streamline the reconciliation process by automatically recording transactions in real-time. This enhanced efficiency contributes to more accurate financial management while reducing the burden on administrative processes.


Effortless Tracking:


Integration of virtual credit cards into accounting systems ensures seamless tracking and reporting. This empowers businesses to analyze and manage expenses with greater precision, creating a more informed decision-making process.


Advanced Fraud Prevention in Accounts Payable:


Particularly advantageous for small businesses, virtual cards play a key role in reducint accounts payable fraud risks. Each transaction is associated with unique details, reducing the risk of unauthorized use and further strengthening overall security in financial transactions.


Early Payment Rewards:


By leveraging virtual credit cards for prompt settlement of invoices, businesses can unlock a broad spectrum of incentives. These can range from cashback offers to discounts on future transactions. This means that taking advantage of this payment method fosters a culture of timely payments but contributes to the overall financial efficiency of the organization.


In addition, the prospect of accruing rewards is a powerful motivator, one that encourages business to streamline their payment processes. This dual benefit not only improves cash flow forecasts but cultivates vendor relationship, strengthening the supply chain. After all, timely payments contribute to a smoother and more reliable business environment.


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Potential Limitations of a Virtual Card


Navigating the world of virtual card requires a careful and considerate approach, one that accounts for their distinctive features and potential limitations.


  1. Limited Use: While the online world offers boundless possibilities, it's important to recognize that at this time virtual credit cards are restricted to online or phone transactions, and can't be used for in-store purchases.

  2. Linking: Failure to link your virtual account to your regular credit card account can pose challenges when pursuing a refund. Without having a designated account to credit the refunded amount, your options may be restricted to an exchange or store credit.

  3. Reservations: Using a virtual card for reservations, especially for services such as flights or hotels, introduces potential hurdles. Certain establishments may request the card used to make the reservation during check-in, requiring extra effort, such as a phone call to the bank, in order to address any potential complications.


Potential Constraints Unique to Businesses


While virtual credit cards offer numerous advantages, businesses should be mindful of potential limitations. These include:


1. Acceptance Limitations:


Not all vendors or suppliers may accept virtual card payments, which could limit a business's ability to use them.


2. Expense Control Challenges:


Virtual cards may pose challenges in terms of controlling employee spending. Without strong expense management tools and oversight, it can be harder for businesses to monitor spending limits and regulate virtual credit card expenditures.


3. Integration Complications:


Integrating virtual credit card systems with existing accounting or financial systems can be complex. Compatibility issues may arise, requiring additional resources and time.


4. Fraud Risks:


Despite their additional security benefits, virtual cards are not immune to fraud. Businesses must implement strict security measures to prevent any unauthorized access or unauthorized transactions, safeguarding against any potential financial losses.


5. Vendor Relationships


Some vendors may simply prefer traditional payment methods and could be hesitant to adapt to using virtual credit cards. This can potentially impact relationships with certain suppliers, requiring communication and additional negotiation.


6. Technology Dependency:


A heavy reliance on technology for virtual card transactions means businesses are susceptible to disruptions cause by technical glitches, network issues, or cyber threats. This again emphasizes a need for and the importance of strong cybersecurity measures.


Is a Virtual Card Different from a Digital Wallet or Payment App?


Certainly. While there are some similarities between these two forms of payment, both generating new card numbers to prevent fraud and being accessible on your phone, there are distinctions that exists.


what-is-a-virtual-credit-card-electronic paymentDigital wallets like Google  Pay and Apple Pay, as well as payment apps such as Klarna and Clearpay, are restricted to use at specific retailers. In contrast, virtual credit cards can be utilized for any online transaction that accepts credit cards.



How Do You Use a Virtual Credit Card?


A virtual credit card number serves as a shield for your primary credit card account, employing a randomly generated card number to safeguard your personal information from being shared online. Once your virtual credit card number has been generated, you will have immediate access to make purchases online along with the ability to request further customizations (such as spending caps).


When you make a purchase online using a virtual credit card, the number reflected on the merchant's receipt mirrors that of a standard credit card.


Where Can You Get a Virtual Credit Card?


Companies such as American Express, Capital One, and Citibank are the most common providers of virtual credit cards. Most credit card issuers will offer the option of a virtual card number but they may require that you initiate the steps required to get virtual number and activate them within your account.


How Do I Request a Virtual Card?


For existing credit card holders from one of the above companies, it's possible that the virtual card option extends to both existing and prospective cards. To explore this you should check your online account settings or contact the relevant customer support service for guidance on accessing and using the virtual card number.




Customizing Your Virtual Card Experience


As previously mentioned, once your virtual card materializes, you'll have the ability to tailor settings such as spending limits and expiration dates.


This personalized touch adds to your control over the virtual card, ensuring that it aligns with your specific needs. Afterwards, armed with this dynamic virtual tool, you can confidently move forward with online transactions through the card app or well platform.


Enhanced Security with Virtual Cards


In general, virtual credit cards offer a greater level of security, presenting a notable advantage at a time when data breaches are increasingly common. The primary benefit lies in the ease of response should the virtual credit card details be compromised. In such an unfortunate event, you can simply cancel the card, sparing yourself the hassle of closing the entire account and waiting for a new (physical) card to be issued.


In addition, some virtual credit cards are designed for single use only, adding yet another layer of protection. In this case if a fraudster gains access to the card information through a data breach or an insecure internet connection, the stolen details become instantly invalid and the risk is immediately eliminated.


However, as with any form of technology, virtual card numbers are not 100% impervious to fraud. Theoretically, hackers could attempt to gain access to an active temporary virtual card number and complete a transaction. However, the Fair Credit Billing Act ensures that consumers are never held liable for more than $50 in unauthorized charges if their credit card is lost or stolen. Additionally, many credit card issuers offer zero-liability fraud protection, further shielding users from unauthorized charges.


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The Advantages of Using a Virtual Credit Card


For individual consumers, virtual card numbers offer a dual benefit: safeguarding both privacy and vital banking account information. They also prove to be instrumental in limiting the extend of data that advertisers can track, providing users with a greater sense of control over their digital presence.


In terms of accounting and technology, businesses can gain significantly from the use of virtual credit cards. These innovative financial tools empower companies to generate both temporary and single-use cards which in turn effectively reduce the risk of fraudulent transactions and unauthorized expenses.


At the same time, virtual credit cards enhance fraud protection measures and give businesses greater control over vendor payments.


By leveraging these advantages, both individuals and businesses can navigate the digital finance landscape with greater confidence and heightened security.




In conclusion, the escalating threat of credit card fraud requires a strategic shift towards the adoption of more secure measures such as virtual credit cards.


Consumers benefit from the convenience of virtual cards, providing a seamless and secure avenue for both online purchases and phone-based transactions without working about potential hacking or abuse.


Simultaneously, businesses leverage these digital tools to streamline workflows and strengthen their overall financial security in the rapidly developing realm of modern commerce.


Embracing virtual cards has emerged not just as a shrewd response towards the rising challenges of fraud but also as a proactive means to enhance the efficiency and resilience of financial transactions in today's business environment.


Contact Yooz Today


YoozPay allows payments with virtual credit cards to execute payments instantly. Request a demo today to find out more or contact our expert team who can answer your questions.


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What is a virtual credit card, and how does it differ from traditional credit cards?

A virtual credit card is a digital payment card that is used for online purchases and transactions. Unlike traditional physical credit cards, virtual credit cards exist only in digital form and are typically issued for a single use or limited time period. Virtual credit cards offer enhanced security and fraud protection, as they can be easily generated and used for specific transactions, reducing the risk of unauthorized or fraudulent charges.

How does Yooz leverage virtual credit cards to streamline accounts payable processes?

Yooz integrates with virtual credit card providers to offer a secure and efficient payment method for accounts payable processes. By generating virtual credit card payments directly from the platform, Yooz enables organizations to automate payment workflows and eliminate manual check printing or wire transfers. Virtual credit cards help streamline the payment process, reduce processing costs, and improve cash flow management for organizations.

What are the benefits of using virtual credit cards for accounts payable, and how does Yooz help organizations maximize these benefits?

Virtual credit cards offer several benefits for accounts payable, including enhanced security, reduced payment processing costs, and improved efficiency. Yooz helps organizations maximize these benefits by seamlessly integrating virtual credit card payments into the accounts payable workflow. Our platform automates the generation and delivery of virtual card payments, provides real-time tracking of payment status, and reconciles payments with invoices, enabling organizations to optimize their payment processes and realize cost savings.

How does Yooz ensure the security of virtual credit card payments and protect against fraud?

Yooz prioritizes security in virtual credit card payments by implementing robust encryption protocols, multi-factor authentication, and fraud detection mechanisms. Our platform securely stores virtual card information, restricts access to authorized users, and monitors payment activity for suspicious behavior. Additionally, Yooz offers customizable approval workflows and audit trail features that provide visibility into payment activities and help organizations detect and prevent fraud.



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