Debit cards are by far and away the most popular way of spending money in Europe. One recent analyst report estimates 18 billion UK purchases in 2020 will be made with debit cards – compared to about 7 billion cash payments and 5 billion direct debits.
Debit cards were first introduced in the 1980s and have gone from strength to strength. However, the finance industry is continually innovating and in recent years we have seen the emergence of ‘virtual’ debit cards. Unlike the plastic rectangles you carry in your purse or wallet, virtual debit cards exist only in a digital form on your phone or online portal.
Why would you want to use a virtual debit card, and how can you go about ordering one?
What is a virtual debit card?
A virtual debit card is essentially a digital version of a traditional plastic debit card. It provides you with an account where you can add money and it allows you to pay for many services in much the same way as a plastic debit card. You get a 16-digit card number, an expiry date and card security code and these can all be used to make purchases online (and in some cases, using your mobile).
You aren’t, however, able to use a virtual debit card for certain kinds of in-store purchases that require chip and pin. And of course, you can’t withdraw cash from an ATM using a virtual card.
When you apply for a virtual debit card, you will receive an email containing the card details. Then, with accounts like Xace, you can log in to manage your money from your computer or smartphone.
But why would you use a virtual debit card? Here are some of common reasons that people choose them.
7 reasons people use virtual debit cards
A virtual debit card can be used whenever you shop online or for payments using your mobile device. Here are seven reasons to use one:
Safety and security for payments
One of the most attractive features of virtual debit cards is that they are virtually impossible to steal or copy. Unlike traditional debit cards which criminals can steal or clone, virtual debit cards are almost impossible to interfere with. For example, account theft is the third most common form of e-commerce fraud whereby criminals steal your debit card and make online purchases without your knowledge. This simply would not possible with virtual debit cards because there’s no way criminals could make a physical copy of the card itself.
Fast and easy
Physical debit cards will typically take at least a couple of days to arrive on your doormat in the post. Besides creating the card itself, the issuing company may also need a couple of days to verify your identity. And if you order the card before a long weekend or from abroad, you could end up waiting the best part of a week before you can start spending.
By contrast, virtual cards usually arrive immediately after your application is complete. The card doesn’t need to be physically ‘made’ – you simply receive an email containing the details in a matter of minutes. That means you can start spending in no time at all.
Cancel after one purchase
There are several scenarios where you will only want to make one or two purchases on a card. You might be buying something from a website you don’t fully trust, making a one-off purchase that you don’t want to appear on your regular bank statement or some other reason. A virtual debit card gives you the ability to create an account, make a purchase and cancel the card immediately – with no strings attached.
Set spending limits
Virtual cards are a popular choice for certain kinds of spending activity because you can control how much is spent on the card. Virtual debit cards are popular with professional gamblers and esports players who wish to set specific spending limits for themselves. They are also an attractive option for businesses who provide staff with personal spending limits, as well as parents who want to limit their children’s online purchases.
Ideal for international payments
Did you know that the average international transaction fee is around 3%? This kind of bank charge can add up fast, especially if your business involves making frequent international payments. Once again, virtual debit cards can be a great option. You are often able to make payments in local currencies and normally get much lower transaction fees than you would expect from a traditional high street bank.
Issue multiple cards at once
Do you have a team of employees or associates who make purchases on behalf of your business? It can be extremely hard to keep track of spending if all your employees are sharing one company card – and it’s also tricky to see who is spending most. By contrast, a virtual debit card gives you a simple way of issuing multiple cards at once, so you can see more clearly who spent what.
Last but not least, using virtual debit cards reduces your carbon footprint since a physical card does not need to be created and posted to you. An individual card may not seem like a lot, yet consider that there are over 20 billion payment cards in circulation on earth, millions of which expire and need to be replaced every single day. On a global scale, a wholesale shift away from using plastic cards would have a significant environmental impact.
Time to try a virtual debit card?
Virtual debit cards will not be right for everybody or every purchase. Nonetheless, they are growing in popularity and for certain kinds of purchase and lifestyle, they can be a very useful option. At Xace, for instance, many of our customers find our virtual debit cards are especially useful for the kinds of activities we support – including international business, gambling, esports and online gaming.
Get your first virtual debit card for free today when you join Xace.