What Is a Virtual Credit Card and How It Works (2024) - Shopify UK (2024)

Digital payments are gaining momentum. According to Juniper Research, the global value of virtual credit card transactions hit $1.9 trillion in 2021 and is expected to reach $6.8 trillion in 2026.

B2B payments represent 71% of total transactions globally. Virtual credit cards offer a secure and easy way to pay online (and in-store, where mobile payments are accepted). Learn how virtual credit cards work and how your business can use them.

What is a virtual credit card?

A virtual credit card is a digital version of your physical credit card. Instead of a plastic card that lives in your wallet, a virtual credit card lives on your phone. Essentially, it's a randomly generated card number associated with your bank account, but not the same as the number on your physical credit card.

How virtual credit cards work

Virtual credit cards protect your payment information during an online purchase by masking your account information. The virtual card issuer generates a random card number, expiration date, and security code (CVV or card verification value) tied to your account.

So, your private information stays secure, while transactions appear on your account statement as if you had used your regular card information.

Benefits of using virtual credit cards

Why use a virtual credit card instead of a physical card? There are multiple reasons.

Safety and security

Electronic payments are safer with virtual credit cards than physical cards. They use encryption to limit how much data is shared, reducing the likelihood of fraud or chargebacks. With no magnetic strips or visible card numbers, there are fewer ways for hackers to gain access to your card info.

In the unlikely event that your virtual card becomes compromised, you can lock your account to block any fraudulent activity.

Complete control over your spending

A virtual card typically lets you choose your currency, set spending limits, customize the length of time a specific card number stays active, and even set it to close after a single use (sometimes called a “disposable card”). This means once you’ve paid, the card details can’t be used again.

Convenience

Convenience is one of the main draws of this digital payment option. There's no physical card to lose or keep track of and no plastic waste. Best of all, if you have multiple employees, they can make payments through their phones without having to share a physical company card.

Rewards

Virtual credit cards can earn rewards and perks, without a physical card. For example, with a virtual pay-in-full credit card via Shopify Credit, you can earn up to 3% cashback on your top eligible spend category each month (marketing, fulfillment, or wholesale). And you’ll earn 1% cashback on eligible purchases from the other two spend categories.*

Virtual credit card uses

Virtual credit cards eliminate the need for a physical card when making online payments. You can use them for just about anything you’d use a standard business credit card for, such as:

• Accounts payable: Use your virtual card to pay for business expenses, like supplier or contractor invoices.
• Business travel: Make virtual payments for work-related accommodations, airfare, meals, car rentals, and other costs.
• Expense management: Create cards with spending limits for specific purposes.
• Subscription management: Easily manage, monitor, and cancel software subscriptions like Zoom, Canva, or QuickBooks.

How to choose a virtual card provider

Many major credit card issuers offer virtual credit cards. So, how do you choose the best virtual card provider? Ultimately, you must select the service, security, and features that work best for your business.

Factors to consider include:

• Security and fraud prevention: Choose a virtual card provider that implements security features like two-factor authentication (2FA) or multifactor authentication (MFA), review and flagging of suspicious payments, and the ability to lock cards.
• Card features and customization options: You’ll also want the ability to create single-use cards, set spending limits, request a physical card, and issue multiple cards.
• Customer support and user experience: It should be easy to view and update your cardholder information, add new cardholders, and link to a mobile wallet like Apple Pay or Google Pay.
• Fees and pricing models: Be sure to review whether a card charges annual, setup, and foreign transaction fees. You'll also want to check the virtual card provider's interest rates, available credit limits, transaction volume, and rewards like cash back or other perks.

Get a virtual Visa® business card with Shopify Credit

Shopify Credit is a pay-in-full business credit card with no annual fees or credit checks. Designed for Shopify entrepreneurs, the card offers a credit limit based on a merchant's business performance**—not their credit score. Once approved, you can use the card for everyday business transactions and a smoother cash flow.

If you are approved for Shopify Credit, you're provided with a virtual card that's automatically activated and ready to use right away.*** You can also request a physical card to be sent via mail, which will arrive in 5-7 business days.

Shopify partners with Stripe Payments Company and Celtic Bank for Shopify Credit. Card products are issued by Celtic Bank pursuant to a license from Visa U.S.A. Inc. See Issuing Bank Terms and Shopify Credit Program Terms.

* "Cashback" refers to rewards earned as a percentage discount on eligible purchases. Earn 3% cashback as a statement credit on up to US$100,000 of annual eligible purchases in your monthly top spend category—either marketing, fulfillment, or wholesale, and 1% cashback thereafter. Earn 1% cashback on the other two spend categories. Restrictions apply. See Rewards Program Terms for details.

** Periodic reviews will be conducted to assess qualification for credit limit increases. If eligible, you have the option to accept the increase at your discretion.

*** If approved, you will receive a virtual Shopify Credit business card which can be used immediately.