Virtual vs. Physical Card: What’s Better?

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Would you still use your debit or credit card if it wasn't a card anymore? Some banks and card companies are offering virtual cards you can use online or with a digital wallet. Though they haven't caught on everywhere yet, virtual cards are gaining in popularity. They're a convenient option if you're waiting for a physical card to arrive, or if you'd like to add a layer of security when you're shopping.

How Do Virtual Cards Work?

Virtual cards in the U.S. generally fit into one of two broad categories:

Virtual credit cards use randomly generated numbers to stand in for your regular account number. You'll also be provided with an expiration date and security code so you can use the virtual card number just like your physical card when you make a purchase online or through an app. The virtual credit card masks your real card information, so your sensitive card data isn't shared. When your transaction is done, you can turn off your virtual card or delete the number from your account for added security without affecting your overall card account.

If the virtual card number is compromised before you're done using it, you can simply alert the virtual card issuer to any fraudulent purchases. The virtual credit card can then be canceled, which saves you the inconvenience that results when a new number must be issued for your real card.

Virtual debit cards are more typically provided as a convenience when you're waiting for a new card to arrive in the mail. Instead of putting your checking account on ice while your physical card is in transit, you can use virtual debit card credentials to pay for things online—or load them into a digital wallet (like Apple Pay or Google Pay) and pay wherever your wallet is accepted or access certain ATMs. These virtual cards may use the same card numbers as your physical debit card; they're basically a way to receive your card information early.

Are Virtual Cards More Secure Than Physical Cards?

A virtual debit card with your regular account number and expiration date probably isn't more secure than a physical card, except that you may be less likely to lose it or have it stolen out of your purse or pocket.

However, a virtual credit card that uses unique numbers in place of your regular card data has some potential security benefits. For example, if you need to pay your property taxes but aren't 100% comfortable with the security on the tax collector's website, you could use a virtual credit card for the transaction, then delete the virtual card once the payment goes through. If the tax collector gets hacked, the card information on file with your account would be useless to the hacker. Since your real card data is never revealed, you don't have to worry about your account being compromised.

On the other hand, a valid virtual credit card is just as vulnerable to hacking as regular card information. As a cardholder, you should be reviewing your transactions for signs of identity theft or fraud and report issues to your card issuer. On the upside, if you do find problems with virtual card transactions, you can easily delete the virtual card without ordering a new card and swapping out all your saved payment information.

Virtual Card vs. Physical Card

Which is better—a physical card or a virtual one? Ultimately, it's a personal preference. You won't be locked into one over the other, either: You can have both. Physical cards are almost universally accepted when you're paying in person, whereas you can't offer a virtual card number to pay for your restaurant check. If your physical card has an EMV chip in it, transaction information (including your card number) is encrypted and inaccessible to hackers. This is true whether you insert your card into a payment terminal or use a contactless payment option.

That said, virtual credit and debit cards definitely have their uses. If you use a virtual credit card to manage recurring payments with a specific merchant, for instance, you can turn your card off or delete it when your recurring relationship ends. That prevents your card information from being pilfered if the merchant is ever hacked. Or you can provide a virtual credit card to your kid at college, so they can order books and school supplies online without worrying that they might sneak additional purchases down the line. Own a business? Employees can use virtual card numbers to make purchases without passing around the card information or needing to be issued a physical card.

For many people, debit cards are the primary way to pay. Having continuous access to your debit card by using a temporary virtual card can help you sidestep a serious disruption. Side benefit: Once you receive your physical card, you may decide to continue using a digital wallet even when you're paying in person. Digital wallets are a relatively secure and easy way to pay—and they don't require you to carry a physical card.

When to Use a Virtual Card

If you're offered a virtual debit card to use until your physical card arrives, there's little downside to accepting it. Virtual credit card numbers are a slightly different story. Here are a few considerations:

Can you get a virtual credit card? Not every major card issuer offers them, so they're not an option for everyone. If you can't get a virtual credit card number directly from your card issuer, you might consider getting one through a third-party service such as Privacy.

Do you need a virtual credit card? Though putting an additional layer of security between yourself and identity thieves is never a bad idea, you may not want to take additional steps to activate virtual cards whenever you're making purchases online.

Can you use a digital wallet or payment platform instead? If you don't want the hassle of creating virtual cards for every occasion, you might consider paying with a digital wallet or a payment service like PayPal when you have the option at checkout. Your payment will go through without the need for you to share your card data or set up and manage a virtual card.

A final note about using virtual credit card numbers to pay. If you want a refund but you've cancelled your virtual card account, you may have difficulty with a retailer who wants to return the money to the card you used for your original purchase. Save your receipts, read up on the return policy and be prepared to accept store credit as a fallback. Also, if you use a virtual card number to reserve a hotel or rental car, you may be asked to present the card you used to secure your reservation when you check in. It's best to inquire about this before using a virtual card to make a payment.

Where to Learn More About Virtual Cards

The best place to learn more about your virtual card options is from your bank, card company or a third-party service that provides them. While virtual debit and credit cards are not available everywhere, financial services companies are constantly adding these kinds of digital features, so it's worth checking out. If you're interested in virtual cards—or any other new card feature—contact your card company. They may be able to tell you how to access virtual cards or may have alternative suggestions that will help.

To find credit cards that offer virtual card numbers—and are personalized to your credit score—check out Experian CreditMatch™.