Corporate cards

What is a virtual credit card and how do they work?

Apr 05, 2024

The rise of online transactions has led to an increase in concerns over the security of sensitive financial data. To address this issue, virtual credit cards have emerged as a new technology that provides a secure and convenient means of conducting online purchases.

By using virtual credit cards, users can benefit from several advantages, including lower risk of fraud and easier management of online transactions.

In Australia, virtual credit cards are gaining popularity as an emerging trend, with more financial institutions offering them to their customers. As consumers continue to prioritize security and convenience in their online transactions, this trend is expected to continue. To get the best out of such a tool, however, you need to be well-versed in the concept of what is a virtual credit card in the first place.

What is a virtual credit card?

A virtual credit card is essentially a number generated randomly. This number is linked with the user's credit account to facilitate online purchases. Unlike physical cards, these cards are not tangible, but they provide a convenient and secure way of conducting online transactions.

Virtual credit cards minimize the possibility of fraud and are becoming progressively favored for online transaction management.

How do virtual credit cards work?

The key to how do virtual credit cards work is a randomly generated number. Virtual credit cards basically work by generating a unique number that is linked to a user's credit account. This number is used to make online purchases instead of the user's physical credit card number.

The virtual card typically has a limit set by the user or the issuing bank, and it generally can only be used for a single transaction. This reduces the risk of fraud, as the virtual card number becomes useless after the transaction is completed.

Virtual credit cards are managed through the user's online account, where they can view transaction details and track expenses.

Benefits of virtual credit cards for business


Easy to use

Businesses find virtual credit cards to be a popular choice because of their user-friendliness. Rather than utilizing a physical credit card for purchases, virtual cards generate a unique number that is only applicable to a single transaction. As a result, businesses are not required to provide physical credit cards to their employees, mitigating the risk of fraud or abuse.

Additionally, virtual credit cards can be easily created and managed online, enabling businesses to keep track of their expenses and manage their accounts efficiently.


High transparency

One of the many benefits of virtual credit cards is transparency. These cards provide high transparency on spending, allowing businesses to monitor their expenses more effectively. By generating a unique virtual card number for each transaction, businesses can easily track who made the purchase and what was purchased.

This level of transparency allows businesses to identify any unauthorized or fraudulent transactions quickly and take corrective action.


Simplify vendor payments

Virtual credit cards make the process of vendor payments much easier by streamlining the payment process. Instead of sending checks or initiating wire transfers, businesses can make use of virtual credit cards to pay vendors quickly and securely.

Businesses can use virtual credit cards for both one-time and recurring payments, making them an ideal solution for those who need to make regular vendor payments.


Simplify accounts payable

Virtual credit cards streamline accounts payable by automating the payment process. By using virtual credit cards, businesses can eliminate the need for manual invoice processing and payment reconciliation, saving time and reducing the risk of errors.

Virtual credit cards can be integrated with existing accounting systems, making it easy to manage and track payments.


Manage reconciliation

Virtual credit cards allow businesses to manage reconciliation in a better way by providing detailed transaction information. Each virtual credit card transaction is recorded with the vendor name, date, and amount, making it easy to reconcile payments with invoices.

This level of detail allows businesses to identify any discrepancies quickly and resolve them before they become a problem.


Highly secured

Another one of the benefits of virtual credit cards is that these cards offer a high level of security, making them an ideal solution for businesses that handle sensitive financial data. Unlike physical credit cards, virtual credit cards can only be used for a single transaction, reducing the risk of fraud and unauthorized use.

Virtual credit cards can also be easily deactivated if they are lost or stolen, ensuring that they cannot be used by anyone else.

How to get a virtual credit card for your business?

1. Choose the credit card provider

Start by researching different credit card providers that offer virtual credit cards. Look for a provider that meets your specific business needs and offers the features and benefits that you require.

Refer our article to know the different factors to consider when choosing a virtual credit card provider.

2. Check eligibility

Once you have identified a provider that you are interested in, check to see if you meet their eligibility criteria. Some providers may have specific requirements that you must meet before you can apply for a virtual credit card.

3. Share required documents

If you are eligible for a virtual credit card, the following step is to provide the credit card provider with the necessary documents. These documents may pertain to your business's legal structure, financial statements, tax information, and identification records.

4. Submit application

After sharing all the necessary documents, you can proceed to submit your virtual credit card application. The credit card provider will review your application to determine if you are eligible for a virtual credit card and the corresponding credit limit.

Once your application is approved, the provider will provide you with a virtual credit card number, which you can use to conduct online transactions.

Our article on how to apply for virtual credit cards explains in detail the procedure for applying a business virtual credit card in Australia easily and quickly.

Make Hassle-free payments and manage expenses with Volopay cards

Things to consider while choosing virtual credit card for your business

Choose the card that best suits your needs

To choose the best virtual credit card fit for your business, it is important to select the one that matches your business need.

Different providers may offer various different features and advantages that may or may not always be useful for your business. It is essential to examine each card's features and determine which one is the most suitable for your business requirements.

Spending restrictions and limits

It's crucial to consider the spending restrictions and limits associated with each card.

Some virtual credit cards may impose lower spending limits than physical credit cards. Others may have restrictions on the types of purchases that can be made, such as not allowing certain categories like gambling or adult content.

Transaction fee incurred

Transaction fees are an essential consideration when choosing a virtual credit card.

Some cards may charge a percentage-based fee on each transaction, while others may offer a flat rate fee. Consider the volume of transactions your business is likely to make and how much those fees will cost over time.

Ease of international transfer

If your business requires international payments, it's essential to consider the ease of international transfer. Some virtual credit cards may impose foreign transaction fees or restrictions on international payments.

Choose a virtual credit card that offers a smooth and secure international payment process.

Access to multiple cards

If your business has multiple employees that require a virtual credit card, it's essential to consider the provider's access to multiple cards.

Some providers may impose limits on the number of virtual credit cards that can be issued to a single account, while others may offer unlimited virtual credit cards.

Check for liabilities included

Virtual credit cards offer enhanced security features to reduce the risk of fraud and misuse. However, it is still crucial to check for any liabilities associated with the card.

Some virtual credit card providers may hold the business liable for fraudulent transactions, while others may offer a zero-liability policy.

Enhanced security

Enhanced security is one of the key advantages of virtual credit cards.

Look for providers that offer additional security features such as two-factor authentication or fraud detection tools to protect against unauthorized transactions.

FX rates

Foreign exchange rates can impact the overall cost of international transactions.

Some virtual credit cards may offer favorable foreign exchange rates, while others may charge a premium. Consider the FX rates when comparing virtual credit card providers.

Annual fee

Just like physical credit cards, virtual credit cards may come with an annual fee or other fees, such as late payment fees or over-limit fees.

Ensure that you are aware of all the fees associated with the card and factor those into your decision.

Why should businesses choose Volopay cards?

1. Easy to create

Creating virtual cards with Volopay is a hassle-free process. Businesses can sign up for an account and start creating virtual cards immediately. It's an easy and quick process, and businesses can start using the cards within minutes.

2. Unlimited virtual cards

Volopay allows businesses to create unlimited virtual cards for their employees without any additional cost. This means that businesses can easily issue virtual cards for various purposes such as gift cards, travel cards, department cards, and much more.

Benefits of using virtual cards for business payments are numerous. However, it is equally important to make sure that you use virtual credit cards in the right way. Refer our article on how to use virtual credit cards effectively for business transactions.

3. Offer cards for your employees

With Volopay you can also issue cards specifically for your employees. These cards can be used by staff members to manage expenses no matter where they are. You can also use this feature to keep a close eye on employee spending.

4. Allocate separate budgets

You can also use Volopay cards as budget cards for all the different departments you work with. This will allow you to exercise even greater control over your funds as well as spending.

5. Hassle-free international transactions

International transactions are extremely easy with Volopay cards. The best part is that the forex rates are competitively low and there are no hidden charges whatsoever.

6. Access multi-currency wallets

Volopay offers businesses the ability to access multi-currency wallets. This makes it easier for businesses to manage expenses in different currencies and avoid currency conversion fees.

7. Low FX rates

Volopay offers low FX rates, making it easier for businesses to save money on foreign exchange fees and make international transactions more cost-effective.

8. Track and manage expenses

With Volopay, businesses can easily track and manage their expenses. The platform provides detailed expense reports that can be used to identify potential overspending and take necessary actions to keep expenses under control.

9. Highly secured

Businesses using Volopay cards can rest assured that their financial information is kept safe and secure at all times. The platform uses bank-grade security and comes with additional features such as multi-level approval workflows to ensure complete security.

Streamline and manage your business expenses easily with Volopay cards


Is it easy to get a virtual credit card?

Getting a virtual credit card is usually pretty easy, however, this may vary depending on the eligibility criteria and requirements of the card provider you choose.

How long does it take to get a virtual card for my business?

The time it takes to get a virtual card for your business may vary depending on the provider. Some providers may offer instant approval and issue a virtual credit card number immediately, while others may take a few days to review and approve the application.

How much do virtual credit cards cost?

The price of virtual credit cards may differ based on the card provider and the available features. Some providers may impose an annual fee, while others may levy a transaction fee on each purchase made using the virtual card. To choose a suitable card, it is necessary to carefully examine the fees and charges associated with each one.

Can I withdraw cash from virtual cards?

No, virtual credit cards typically cannot be used to withdraw cash from ATMs. They are intended for online purchases only.

Can we do international transactions using virtual credit cards?

Yes, virtual credit cards can be used for international transactions, but it is essential to check with the provider if they allow such transactions and the associated foreign exchange rates.

Are virtual credit cards accepted everywhere?

Virtual credit cards may not be accepted everywhere, as some merchants may not accept them. It is essential to check with the provider or the merchant before making a purchase.

How long does it take to get a virtual credit card for my business?

The time it takes to get a virtual credit card for your business may vary depending on the provider. Some providers may offer instant approval and issue a virtual credit card number immediately, while others may take a few days to review and approve the application. It is recommended to check with the provider about the expected timeline for issuing a virtual credit card.