Virtual cards, which are also referred to as temporary cards, are payment tools that are randomly generated and linked to a payment account. They act as a substitute for genuine payment details and provide an enhanced layer of security compared to physical cards. Virtual cards typically consist of a 16-digit card number, an expiry date, and a CVV number.
According to a report by Juniper Research, virtual cards can exist as digitized versions of physical cards or as cards that only exist in their virtual form and are stored in digital wallets. The main advantage of virtual cards is that they allow users to make online purchases without having to disclose their bank details. This means that even if a virtual card is compromised, the core bank details remain secure.
Virtual cards are commonly used in fleet and mobility management, B2B travel expenses, purchases, procurement, marketing, and advertising campaigns. However, there are potential applications in financial markets and the accounts payable industry. While virtual cards have been more popular in the business sector, they have gained traction in the consumer market in recent years. Digital challenger banks have developed virtual cards tailored for wealth management, budgeting, family accounts, and fraud prevention.
Juniper Research predicts that the total volume of virtual card transactions will reach 175 billion by 2028, up from 36 billion in 2023, representing a significant growth rate of 388%. This growth will be driven by the adoption of API virtual card issuing platforms, which allow businesses to easily establish and scale virtual card programs. The availability of easy-to-use API platforms and the readiness of virtual card platforms to integrate with existing software and infrastructure are key factors contributing to the expansion of the virtual card market.
In conclusion, virtual card vendors must collaborate with third-party software systems across various industries to maximize their success. As the demand for secure and convenient payment solutions continues to grow, virtual cards are expected to play a significant role in the future of financial transactions.
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