What are virtual business credit cards and how do they work?

Virtual business credit cards are digital card numbers issued by a credit card provider that allow businesses to make payments without using a physical card. They can be a great way for business owners to mitigate fraud risks and control overspending. Unlike physical cards, virtual cards can protect sensitive account information and limit employee and vendor spending.

Learn more about virtual business credit cards, how they work and the advantages they can offer business owners. 

What you’ll learn:

• Virtual business credit cards are unique, digitally generated 16-digit numbers—associated with your business account—that you can use online just like a physical card.

• Virtual cards offer additional security features, such as being restricted to a specific vendor. These features help minimize the impact of fraud.

• Setting spending limits on virtual cards can help manage employee spending and curb vendor overcharging.

A virtual business credit card is a unique, digitally generated 16-digit number associated with your business account. It may also be referred to as a “ghost card” or “masked card.”

Businesses can use virtual cards to pay for purchases online or over the phone, just as they would with a physical card. Virtual cards can give business owners greater fraud protection, control over employee spending and more.

Virtual business credit cards work the same way as physical cards, but they’re exclusively digital. Each virtual card comes with a unique 16-digit card number, expiration date and security code. Once you create a virtual card, you can use it for online purchases—or in some cases, through a digital wallet.

Many virtual cards are designed to be used at a single vendor or supplier and could be declined if used elsewhere. After a purchase, the transaction will usually appear on the account statement just like a purchase made with a physical card. 

The process for creating a virtual business credit card varies by provider, but it typically happens through your business credit card account. Capital One business customers can learn more about creating virtual cards.

Virtual business credit cards are typically tied to the same account as a business’s physical card, but they differ in format and how they’re used. Physical cards are tangible and common with in-person purchases, while virtual cards exist only in digital form and are generally used for online or other card-not-present transactions.

Because virtual cards are separate from the physical card, they can be created, managed or deactivated digitally without waiting for a replacement card to be mailed.

Virtual cards offer improved fraud protection, real-time visibility into transactions and employee spending, controlled vendor payments, and more. These benefits make virtual cards a popular option for businesses looking to protect their information and manage their recurring payments more securely.

Virtual business credit cards often include enhanced security features compared with traditional physical credit cards. The ability to create a unique virtual credit card for each vendor helps reduce the risk of fraud to the business account as a whole. If a virtual card is compromised with one merchant, you typically can’t use it anywhere else.

In the event of fraud, business owners can often cancel individual virtual cards instantly without affecting other virtual cards associated with the same account. Similarly, if a physical business credit card is lost or stolen, virtual cards may remain active and unaffected.

Virtual credit cards allow business owners to set spending limits for each employee. If a virtual card can only be used with a specific merchant account or up to a certain dollar amount, it can help ensure employees don’t misuse company funds beyond those parameters. Business owners can also lock a card when needed to help prevent overspending.

Another advantage of virtual business credit cards is the ability to control vendor payments. Business owners can assign virtual cards to specific vendors and set custom spending limits that reset on a defined schedule. This can help prevent vendors from overcharging.

Business owners can also leverage virtual credit cards to support their business goals. By assigning virtual cards to certain employees, budgets or merchants, they can segment cash flow, manage departmental spending and drive growth without juggling multiple business accounts or physical credit cards.

Virtual business credit cards can help businesses protect their finances from fraud, simplify expense management and maintain greater control over spending without exposing their physical card number. 

To see how these benefits could apply to your business, explore Capital One business credit cards and see whether you’re pre-approved—with no impact on your credit scores—before applying.