What is a virtual credit card and how to apply for one?
The credit card has long stood as one of the most preferred modes of payment for business organizations across the world. It continues to be used widely to pay for business expenses. However, as the world has become more and more digitized, the need for a digital version of the credit card has also grown. This has led to the creation and subsequent surging popularity of what is now known as virtual credit cards.
What is a virtual credit card?
To understand what is a virtual credit card you need to first understand that a virtual card is not a card on its own. It is typically linked to an original, physical credit card. When virtual credit cards are issued a randomly generated 16-digit number and a CVV code are created that are linked to a primary credit card.
The virtual card is essentially a digital version of the physically existing credit card and can be used in the same way, across virtual or online spaces. It is mainly used on transactions where the user might want to not use or reveal their original credit card details. This is typically done for security reasons.
Types of virtual credit cards
There are mainly two types of virtual credit cards that are currently in use:
Single payment
Simply put, single payment virtual cards are cards that are typically intended for one-time use only. These cards are designed to be used as payment tools that are only required for a single event or transaction.
They are easy to create and you need to specify information such as date of expiration, amount of credit loaded, and linked budgets or departments if any.
Multi-use
For companies that need virtual cards for making regular spending then multi-use virtual cards are the variant to go for. Multi-use virtual cards are basically virtual cards that can be used for repeat transactions, most popularly for recurring payments.
You can use these cards for making recurring payments such as monthly subscription payments and payments to vendors you work with periodically.
At the time of creating a multi-use virtual card, you need to specify a periodic date on which payment will be made automatically every month and the amount that has to be paid.
How do virtual credit cards work?
The way virtual credit cards work is not really very different from your typical, physical credit card. The difference, however, lies in the fact that a virtual card is not really an actual card by itself.
Virtual cards are typically generated as a digital payment tool that is connected to a main physical credit card. They are assigned a randomly generated 16-digit number and a CVV code that expires after a set date or spending limit.
When creating a virtual card you will have to specify information such as user name, credit limit, date of expiration, assigned budget, and department. These cards work as both burner cards as well as recurring payment cards. This means that you can set virtual cards to expire after a single transaction or set it up as an automated tool that will pay a certain amount on a certain date after periodic intervals.
5 best virtual card providers in India
1. Volopay virtual card
● Overview
Volopay virtual cards are a part of the complete suite of payment tools and the expense management ecosystem the brand offers to its customers.
● Key features of the card
Volopay virtual cards are some of the best in the industry with features like unlimited issuance, real-time expense tracking, custom spending limits for each card, custom expiry dates, two-factor authentication for payments, and security measures like freezing & blocking the card among many other benefits.
● Fees and charges
Volopay offers its platform and virtual cards to businesses on a SaaS subscription based on the transaction volume and number of transactions the business requires to make every month.
● Limitations
Currently, Volopay virtual cards have limited international transaction capabilities limited to only being able to spend in USD.
● Suitable customers
The virtual cards offered by Volopay are an extremely flexible payment tool catering to various needs. This makes it a great choice for small and large businesses.
Read our in-depth article to learn more about the top virtual credit cards in India and what sets Volopay apart from the competition.
2. SBI corporate virtual card
● Overview
SBI is one of India’s most trusted banks. They have a comprehensive virtual card product that can be used by many businesses.
● Key features of the card
The primary account number and the complete credit limit are not exposed to the suppliers when making payments. The card details are transmitted in a secure & encrypted manner while making payments.
● Fees and charges
There is no joining or annual fee for this card.
● Limitations
If you want to make international transactions using this card you might incur high currency conversion fees up to 3.5% of the payment volume.
● Suitable customers
The SBI virtual card is a good choice for most businesses of different sizes.
3. HSBC virtual card
● Overview
HSBC is one of the world’s largest and well-renowned banks. Their virtual card product is a great choice for businesses with diverse needs.
● Key features of the card
The HSBC virtual card provides control, compliance, and security against fraud. It helps in the management of working capital and the ability to negotiate better terms with suppliers to reduce payment costs.
● Fees and charges
The HSBC website does mention the fees or charges related to getting their virtual cards. You will have to contact their representative for further details on pricing.
● Limitations
The HSBC virtual card may not be ideal for smaller businesses with simple requirements for their daily payment needs.
● Suitable customers
Medium to large businesses are the ideal customers for HSBC virtual cards.
4. Wise virtual card
● Overview
Wise is a fintech company similar to Volopay. They have a comprehensive virtual card product.
● Key features of the card
The Wise virtual card can be added and used through apps like Apple Pay and Google Pay. The card is available to use in over 30+ countries. They are also authorized by the UK Financial Conduct Authority.
● Fees and charges
The fees and charges related to a Wise virtual card are unclear. You must make an account and start the ordering process to know more.
● Limitations
The Wise virtual card unlike others in this list is more catered to personal use than for business use. They have separate corporate cards for employees for business purposes.
● Suitable customers
This card is suited for individuals who tend to travel a lot and e-commerce shoppers.
5. Enkash corporate virtual card
Overview
Enkash is a financial services company based in India. They have a spend management platform that also offers virtual cards for businesses.
Key features of the card
You can issue an Enkash virtual card with minimal formalities and a fast onboarding process. You can easily create and start making payments using the Enkash virtual card online and track the expenses seamlessly through their platform.
Fees and charges
No specific details about fees and charges for using virtual cards are present on their website.
Limitations
Being a fairly new brand, the company does not have any ratings on G2, making it a bit difficult to gauge their service to customers.
Suitable customers
Any small to medium-sized business can try out the Enkash virtual card to manage their expenses.
Looking for virtual cards to manage your business expenses?
Documents required to apply for a virtual credit card for your business?
● Identity proof of the business owner/stakeholders and signature
Documents such as an Aadhar card, passport, or voter ID can serve as identity proof, along with the authorized signatory's signature.
● Address proof of the business owner
Address proof documents like utility bills, rental agreements, or property tax receipts should be provided as proof of the business owner's residence.
● GST certificate & GST number of the business
Submit the Goods and Services Tax (GST) certificate and the unique GST identification number assigned to your business.
● CIN Number (Company Identification Number)
If your business is registered as a company, you must provide the CIN number as proof of registration.
● Bank account statements for the last 6 months
The bank statements for the last six months demonstrate the financial stability and transaction history of your business. These documents are important proof to determine your business’s ability to pay back the debt you will take on while using virtual credit cards.
10 benefits of using virtual credit cards for business payments
Help streamline the AP process
Virtual cards offer swift and secure modes of payment that can significantly improve the efficiency of your company’s accounts payable system.
With the help of virtual cards you can set up payments for your vendors to be paid automatically on the date of payment, this ensures that all your vendor payments go out on time and you never have to pay late fees again.
You can also use these cards to set up a recurring payment and manage your subscriptions.
Improves accountability
Using virtual cards to manage expenses made by employees is a great way to improve the level of accountability in your organization. Instead of sharing company credit card details with every employee that needs to make business purchases, you can simply issue them individual virtual credit cards.
You can issue each employee that needs to make purchases on behalf of the business their own dedicated virtual card. These cards come linked with spend tracking software that you can use to track how employees are using their cards and hold them accountable.
Improved security
Using virtual cards instead of your actual physical cards is a convenient way to improve the level of financial security your company has.
Company credit card details are sensitive pieces of information and can be easily misused or compromised. There may be cases where you have to make a transaction but sharing your actual card details might not be the best course of action.
In these cases, you can simply create a virtual card for that specific purchase. Since virtual cards are randomly generated numbers that are linked to your primary account details won’t get revealed.
Eases the reconciliation burden
Expense reconciliation can be a highly time-consuming and labor-intensive process, especially when done manually. It is essentially the process by which finance and accounting teams ensure that general ledger entries match the actual expenses that were made.
With virtual cards, however, the reconciliation process can be pretty much entirely automated. These cards record transactions as and when they occur. All you need to do to reconcile these expenses is click a few buttons.
Simplify vendor management
Managing vendors and vendor payments can be much easier if you use virtual cards. Instead of using one physical card to pay for all your vendors you can simply issue individual virtual cards for each of the vendors you work with.
These cards come equipped with spend tracking features so you can track and manage exactly how much you spend on each vendor. Furthermore, you can even set up automated, recurring payments for the vendors you regularly work with.
Easy and fast payment option
Virtual credit cards in India offer a payment option that is both easy to use and at the same time fast in effect. Virtual cards eliminate the need to carry around a physical card to pay for business expenses.
You can simply issue a virtual card. These cards can exist on your mobile phones which you can use to pay with a simple tap. The processing of the actual payment is instantaneous and you won’t even have to divulge your actual card details.
Increased control on expenses
Virtual credit cards in India typically come equipped with spend control features that can help you increase the degree of control you can exercise over purchases made by your business.
You can set up controls to enable or disable the use of cards online, in physical stores, for cross-border transactions, when the balance is low, and on international ATM withdrawals. This ensures that you have direct control over the where, how, and why of company funds usage.
Prevents shadow spending
When employees bypass procurement policies, whether intentionally or unintentionally, to enable unauthorized purchases on corporate credit cards then the act is called a shadow spend.
Shadow spending can be easily curtailed with the help of virtual cards. You only need to ‘top up’ or load the virtual card with the amount that needs to be spent, nothing more. This ensures that there will be no possibility of overspending or shadow spending because there won’t be excess funds available in the first place.
Reduced incidents of fraud/theft
Reduced cases of fraud or credit card theft is a major bonus of using virtual cards. These cards offer an extremely secure alternative to using your actual company credit card.
You can create purpose-driven, single-use cards that will be linked to your main credit card but at the same time will not divulge your original card details.
Moreover, even if by any chance your virtual card gets misused the only funds that will be at risk are the amount you have loaded your card with, not your entire account balance.
Instant generation
Unlike physical credit cards, virtual credit cards in India can be generated instantly. There is no need to fill out a long application process and wait for approvals. All you need to do is navigate to your card provider’s software system, click a few buttons and your virtual card will be generated within seconds.
At the time of card creation, you can specify which vendor the card will be for, the date of expiration, the amount loaded, and other details. All of this will be instantly recorded and your virtual card will be generated.
Streamline business payments with virtual cards!
What are the ideal features of a virtual credit card?
1. Temporary virtual card numbers
One of the key advantages of a virtual credit card is the generation of temporary card numbers for each transaction. This feature reduces the risk of fraud and unauthorized usage, as the virtual card number is valid only for a single transaction or a limited time.
2. Customizable spending limits and expiry dates
Virtual credit cards allow businesses to set individual spending limits for different employees or departments. Additionally, they offer the flexibility to set expiry dates on each card, ensuring greater control over expenses.
3. Easy integration with expense management software
Integration with expense management software simplifies the process of tracking and managing transactions, providing real-time insights into spending patterns, and helping businesses stay organized.
4. Global acceptance
The ability of virtual credit cards to be accepted globally facilitates smoother international transactions, making them an ideal payment solution for businesses with international operations or payments needing to be made to suppliers or vendors abroad.
5. Enhanced security
Virtual credit cards provide an extra layer of security compared to physical credit cards. The temporary nature of the card numbers and the ability to set spending limits mitigate the risk of fraud and unauthorized transactions.
Factors to consider when applying for virtual credit card
Before you get your company a virtual credit card you need to ascertain the purpose or requirement for that card in the first place.
To be precise, you need to determine why it is needed, what it will be used for, and how to make the best use of the cards.
Virtual cards typically come in two variants - single payment cards and multi-use cards.
When picking a card provider you need to determine which type of card your business will be using the most or whether there will be a requirement for both types.
The application process for credit cards can be long and complicated. You need to check whether these complications carry over to the issuing of virtual cards as well.
The easier the application process will be the more convenient it will be for you to use the cards.
The costs associated with using virtual cards is also an important factors to consider when choosing a provider.
Attached expenses such as interest rates, card issuing charges, annual fees will have an impact on the ROI of the cards you pick. Make sure you pick a card that justifies the costs.
Credit cards can be sensitive tools to use given that they are linked with a lot of funds.
When choosing a virtual card provider you should consider if they have the right security features in place such as spend controls, approval systems, blocking and freezing, and so on.
If the virtual card provider you choose also comes with accounting integration features then that’s definitely an added bonus.
Easy integrations with accounting and other company software can make life much easier for your finance and accounting teams.
Use cases of virtual credit cards
For subscription management
Virtual cards are a great tool that can help you manage and pay for all the subscriptions your business has on its roster. You can create dedicated cards for each of your subscriptions.
For each subscription card, you can specify the date of payment, the amount to be paid, and the expiration date. By setting this up you ensure that payments will go out automatically, without the need for any human intervention and without any delays.
This not only helps you pay for your subscriptions on time every time but you may also benefit from early or on-time payment offers or perks.
For business travel expenses
Handing out physical company corporate cards to employees who are traveling for business purposes can be risky business. There is always a possibility of the card being misused, damaged, or even stolen.
Instead, you can simply issue every traveling employee with their own virtual card. You can load these cards with per diem allowances and other expenses employees might have to pay for while on travel.
Not only does this keep your original card safe but it also prevents overspending on the employees’ part. Additionally, you can track the patterns of employee spending behavior when they are traveling.
For online purchases and bill payments
Using your original, physical company credit card on online marketplaces and for bill payments could lead to card details being leaked or hacked. Online marketplaces especially aren’t always the safest when it comes to protecting customers’ sensitive financial information.
The safest alternative in this situation is to simply use virtual cards for online transactions and bill payments. You’ll easily be able to purchase without having to reveal your real card details.
Only the randomly generated 16-digit number and CVV code of your virtual card will be shared, thus keeping your main account always protected.
For making vendor payments
Managing vendor payments with a solitary physical company credit card can be a difficult task, especially if you are a firm that regularly works with a large variety of vendors and suppliers.
There will be a lack of visibility, and an increased probability of missed payments and errors.
Instead, you can issue dedicated virtual cards for each of the vendors you work with. This way you can set up automatic payments, never miss a payment date and at the same time gain analytical visibility on company spending behavior at the vendor level.
For managing employee expenses
Single-use virtual cards are excellent tools for managing miscellaneous employee expenses like employee engagement incentives, referral programs, employee training, employee gifts, and so on.
You can create dedicated cards for each program and set them to expire once the activity is completed. This way your main credit card as well as your funds stay protected and at the same time you can maintain strict control over each employee expense program.
Moreover, if there are any changes to the project requirements you can simply edit and reissue a new virtual credit card.
For managing marketing spends
The marketing department in particular is a part of a business that frequently needs to make purchases for a variety of reasons and needs access to the company credit card. This includes regular spending on both online and offline advertising, paying for marketing events, campaign management and so much more.
This leads to a lot of back and forth between teams using the card as well as an increased possibility of the card getting misplaced, damaged, or misused.
Instead, you can just issue dedicated virtual cards for the marketing department as a whole or even one card for each of the marketing projects you are undertaking.
Issue unlimited virtual cards for your employees instantly
Is Volopay the best option for getting a virtual credit card?
In today’s day, there are numerous options when it comes to choosing virtual cards in India. Ultimately, the decision you make should be determined primarily based on your business requirements.
A great virtual card option that comes with the right set of features is Volopay, here’s why:
Card security
Volopay virtual cards come with multiple layers of bank-grade security features to keep your funds protected at all times.
Additionally, you only need to load the cards with the amount that needs to be spent, therefore keeping your actual funds safe from any harm, theft, or misuse.
In-built spend controls
When using Volopay virtual cards you are given the ability to make customizations to the usability of the cards to ensure they are used the correct way.
This is done via the various in-built spend control features that the cards come with such as preset spend limits, controls on where the cards can be used, multi-level approval workflows, and easy blocking and freezing.
Superior support
Volopay provides a hands-on, superior level of support to all its clients. Clients can easily reach out to their account manager or to the Volopay support team at any time with any issues they may have with using their virtual cards.
Ease of applying and unlimited cards
The process of applying for and issuing virtual cards is straightforward with Volopay. All you need to do is navigate to the Volopay cards dashboard and click a few buttons, your card will be generated almost instantly.
Moreover, you can create an unlimited number of virtual cards with Volopay at no extra cost whatsoever.
Spend analytics
Volopay’s expense management software tracks and monitors each and every transaction made using your virtual cards.
All this data is consolidated by the system itself to give you in-depth, actionable insights and analytics into how the cards as well as company funds are being used.
No hidden charges
There are no hidden costs or charges associated with Volopay cards whatsoever, even for international transactions.
Volopay charges no additional transfer fees, which means that no SWIFT or processing fee is charged. In fact, you can issue an unlimited number of virtual Volopay cards completely free of charge.
Unified dashboard
With Volopay you get the complete package you need to manage your cards in the form of a comprehensive, unified dashboard. All you need to control your virtual cards can be done via this dashboard.
You can instantly create cards, block or freeze them, track spending, view analytical data, and much more from this dashboard alone.
Who is eligible to apply for Volopay corporate virtual cards in India?
The eligibility criteria for getting Volopay corporate virtual cards in India are not particularly complicated. All you need to do is be above 18 years of age and have an established business entity.
You might also be required to produce identification documents for your business such as name and address proof. Your personal credit score or history will have no impact on your eligibility.
However, you might be required to produce documents elaborating on your business’s credit history.
Benefit your business with smart virtual cards from Volopay
FAQs on virtual credit cards
A virtual credit card can be used for almost any online business expense. Similar to a physical card, it has a unique 16 digit number, CVV, and expiry date that need to be input when making an online payment.
Yes, you can use a virtual credit card to make online advertising and marketing expenses such as Facebook ads. With custom spending limits that you can set on a virtual card, it is a great way to ensure that your Facebook ads never cause overspending.
Volopay provides its virtual credit card services to businesses. As long as the individual has a business of their own where they need to manage their expenses, they can apply for Volopay cards. Different criteria will be used to determine whether the individual qualifies for a Volopay virtual credit card.
You do not need any additional documents to apply for a Volopay virtual card once you have been onboarded on the platform. You can simply go to the respective section on our platform and issue a virtual card.
Yes, AWS is a type of online expense that can be paid using Volopay's virtual credit cards.