Virtual payment cards, also known as temporary cards, are randomly generated temporary card numbers linked to a payment account that is used to process payments in place of genuine payment details.
A virtual card is an online payment tool that has similar attributes as a traditional Credit or Debit card, with key components including a 16-digit card number, an expiry date, and a CVV number.
These cards are digitized versions of a physical card or a card that only exists in its virtual form and is stored in digital wallets. The distinctive feature of virtual cards is the enhanced layer of security.
Virtual Card Market Development
According to the latest worldwide market study by Juniper Research, by 2028 global virtual card spending will have increased by 355 percent -- that's from $3.1 trillion in 2023.
The key growth driver will be the adoption of API-based virtual card issuing platforms.
Juniper analysts explored the use cases where virtual cards use temporary card numbers linked to an existing payment account, for the specific purpose of processing online payments.
Moreover, they discovered that virtual cards provide a secure and fast way to distribute funds, while effectively managing payment spending limits.
API-based virtual card issuing enables cards to be created more seamlessly and cheaply, improving efficiency and unlocking greater use cases within business-to-business (B2B) and consumer payments.
Juniper Research's latest assessment revealed that Stripe, Revolut, and Marqeta are currently the established leaders in the virtual payment card marketplace.
Juniper analysts identified intuitive, API-based platforms, with easy-to-use functionality to securely deploy cards and manage spending restrictions, as the most important factors in their success.
"Virtual cards offer an adaptable solution that can be heavily customized, including spending limits and restrictions -- enabling businesses to significantly improve their spend management while reducing costs," said Daniel Bedford, research analyst at Juniper Research.
In the highly competitive consumer virtual cards space, Juniper Research recommends that vendors offer loyalty- and rewards-linked cards, to differentiate themselves from the competition.
Outlook for Virtual Payment Card Applications Growth
According to the Juniper assessment, exclusive offers on partner products, rewards points, and cashback on specific merchants can successfully encourage virtual card spending and customer retention.
This will require virtual card platforms to build out partnership ecosystems, either by partnering directly with merchants, or with existing loyalty services.
That said, I believe while it is true the applications and popularity of virtual cards are expanding, some sectors of the digital economy have yet to reap the rewards. Apps are common in fleet and mobility management, B2B travel expenses, purchases, procurement, marketing, and advertising campaigns.
Plus, there are potential areas of virtual card application growth in financial services markets and the commercial accounts payable industry.