What is a Virtual Debit Card and How Does it Work?

The way people spend, manage, and share money has completely changed over the years. Only a few short decades ago, everything was being paid for in cash. Looking forward, people have started to adopt things like a virtual debit card, internet banking, and online stockbrokers. Checks were something that was used every single day by many people in the past. Fifty years ago, few people would believe that cash and checks would no longer be king in their lifetime. 

Fast forward some years, and physical credit cards and debit cards became more widely used than checks and cash. Credit and debit cards allowed people to make purchases nearly everywhere without cash and also allowed users to begin purchasing items online. Likewise, technological advancements gave old-school, traditional banks a modern touch. Many banks offered these credit and debit cards to customers and began to create online platforms that could allow you to check your account balance, view your transaction history, and even transfer funds from account to account. Currently, about 110 million Americans have made use of one of these “digital wallet” features. 

Today, there is an unbelievable amount of digital financial services available to everyone, right from their smartphone. The phrase “there’s an app for everything” perfectly describes the world of personal finances. Banks and standalone apps are offering customers ways to make their finances efficient and easy.  There are apps for budgeting, money transfer apps, apps to trade stocks with, and even apps like Possible you can get loans within minutes on! People’s finances have truly become digital. 

One of the more recent ideas to come out of this technology boom in the finance world is the virtual debit card. Let’s take a look at what exactly a virtual debit card is, how they work, and how you can get one yourself today! 

What is a Virtual Debit Card or Virtual Payment Card?

A virtual debit card is truly what it sounds like. It is a way to make payments without actually having anything physically given to you, like your normal plastic credit Even though it is all digital, you can still do many of the same things with a virtual debit card as you could from your typical credit card insurer. With a virtual card, you can make an online transaction the same way you would normally. 

When a user wants a virtual debit card, their card provider automatically generates card information such as the virtual card number, and you can create the PIN should you ever need it. With this, a virtual debit card user has all the information they need to make an online transaction. This applies to both online shoppers and businesses that make an online purchase for supplies or inventory. 

These cards are usually very customizable too. After one purchase, you can get an entirely new card number generated for you, and you can put more money on it very easily, or you can just continue using the same one. Likewise, you can choose how you want your money on the card to be spent. For example, you can limit your spending to one site or company as well as putting a limit on how much you can spend on your card. 

However, because the card is digital, and many physical stores do not have the capabilities to accept such payment yet, a virtual debit card cannot be used at in-person stores. Another issue that comes with this is returns on purchases. Usually, when you need to return something online, the money will just go back on your card. This is an issue with these digital cards because you are often getting new cards and new card information, so it is very difficult to get money on a new card for a purchase that was made on a new card. 

Online shopping has grown exponentially over the last few years, and it will continue to do so as well, especially in this Covid-19 economy. Many people purchase more than half, if not everything, online. Overall, virtual debit cards offer a very intuitive way for customers and businesses to make purchases in this online shoppers’ economy. Let’s look at some of the reasons a card like this could be right for you.

Why Use a Virtual Debit Card?

You’re Switching an Account 

Most people are not with the same bank or card provider their entire life. Some cards or banks fall in and out of favor, and sometimes moving between states or jobs might make you switch up your finances a little. Whatever the reason, there may be a period between your switching an account that you need a credit card or a debit card to make purchases with.

Requesting cards can take a while. If you have ever had to cancel your card or a card of yours has expired, you know how long it can come in the mail. You also know that you can’t exactly go out and buy many things if you don’t have a card to pay with. If you are in between switching your account or your card provider, this is where virtual cards can come in. Instead of taking a week to arrive in the mail, a virtual debit card can be set up within a very short period of time. You can access a card within the hour and start making purchases online with your own money.  

Whenever your physical card arrives, you can always just delete your digital card without any hassle. Using a card like this is a great way to make online purchases still if you are in debit card limbo. 

Security

This is a huge area of digital debit cards that beats physical cards. Virtual debit cards are arguably the safest way to make online purchases for both customers and businesses. 

Today, scammers and thieves are extremely clever when it comes to online transactions. If you are like most people, you may have run into an instance where you ordered something and you received something completely different, or the item just flat out did not come. Scammers will even go as far to make identical websites as the one you are looking to shop at, and offer you low prices to lure you in, when in reality, you are not getting the product you were looking for. Further, if some of these shady sites get your debit card information, you could have your card stolen. The criminals could then start making purchases on your card or even go as far as committing identity theft. The risk of getting scammed on online purchases is extremely relevant and can happen to anyone, and virtual debit cards can be one of the best ways to combat this. 

Why is this so safe to use virtual debit cards against these scammers you may ask? Virtual debit cards are almost impossible to steal or to copy. Why’s this? Well, as mentioned earlier, you can have your virtual card be deleted after just one purchase. If you make a purchase on a shady website or your card information falls into the wrong hands, there is nothing they can do with your card information. If your card is deleted, the numbers they use to make purchases or to try to steal your identity will have no use because they will be numbers for a card that doesn’t exist. Pretty cool right? 

Even if you want to be using the same digital card for a while, your money is still safe with it. Even if the scammers have the card number for the card you are currently using, it will be impossible for them to use it if you have a specific purchase price. You can set specific guidelines as to what you want your money to be spent on. For example, you can make a restriction that your virtual debit card can only be used at Amazon. If your card number is stolen and the thief tries to make a purchase on a different website than Amazon, the purchase simply will not work and your money will be safe.

Likewise, you can also make a specific purchase amount for your card. If you plan to make purchases of the exact same amount, like $400, you can set your virtual card price to $400. That way, if someone gets your card number and they attempt to make a purchase for $300 or even $399.99, it still won’t work!

You’re underlying bank account information oftentimes is not used for virtual debit cards either. Even if someone was able to get access to your card and normally would be able to have access to your bank account, most of these virtual cards prevent this and take measures to make sure your bank account information is in no way attached to your virtual card, even if that is where you’re getting the money for the card. 

Overall, virtual debit cards are one of the safest ways to make purchases online and should be heavily considered for customers or businesses that worry about scamming and identity theft. 

Good for Businesses 

If you are a small business, there is a chance that some of your accounts for your business are tied in to your personal account. If something were to happen to your account or your business account, both accounts could be in danger. Thankfully, the security measures that come with these virtual cards essentially eliminates that danger. You the business owner can confidently make purchases online from your suppliers. 

If you are making international purchases with your business, a virtual debit card may come in handy once again. Your current bank or card provider may charge you an international transaction fee of up to a 3% fee for an international purchase. If you own your business, that’s money coming out of your wallet. Many virtual debit cards have no international fee, which can make these transactions much cheaper. 

You also may easily issue many of these cards to your employees. Instead of having a single card that might get lost or stolen, you could give each employee a card and have a set amount on it, or specify which vendors they could buy from. 

If you own a small business during this global pandemic, there is a chance you may have had to completely move your business online. You likely have not been able to meet your supplies or customers in person and many of your business operations may have to be carried out online. Virtual debit cards are an effective way to make online purchases for both your business as well as your customers. 

Good for Parents

While putting spending limits on your card could be good for your business or good for your own spending purposes, it is actually also a great tool for parents. Kids can be mischievous sometimes and might use your card to make purchases you don’t approve or are wildly expensive. 

Using a virtual debit card for your kid can be both safe, and a great way to foster good spending habits for your kids. The limits you can put on the card for your kids will ensure they don’t unknowingly spend $2,000 on Fortnite. This not only saves you from your child making a gigantic financial mistake, but it can also teach them how to take care of the money that they have. 

Where to get a Virtual Debit Card

Convinced? Do you think you want a virtual debit card now? Virtual debit cards are becoming more widely available, but they are still not everywhere, so let’s look at some places you can get one. 

There’s a chance your bank already offers them. While not every bank does, banks like CitiBank and others offer them, so go online to your personal bank or your nearest bank branch and see if they can offer you one. 

Aside from banks, some free and easy to use apps can get you a virtual card. For example, the company Privacy (good name right?) offers these digital cards. Likewise, Blur and Skrill are apps that offer these cards along with other services, like sending money to your friends and even playing online poker if you choose Skrill!

Overall, we may be seeing virtual debit cards become more and more common in the future. Virtual debit cards are a great way to conduct business and shopping online,  without the risk of cyber threats. 
Need some extra cash to put on your digital card? Get a loan with Possible today!