Virtual Cards in the UK 2025 - Better Security & Budget Control
Virtual cards have emerged as a revolutionary financial tool, offering businesses a modern approach to budgeting, cost control, and security of financial data. In the UK, these digital payment solutions gained significant traction during the COVID-19 pandemic, when their ease of setup and management proved invaluable amid restricted traditional banking and business operations. The best virtual debit cards offer features and advantages for consumers, such as enhanced convenience and security over traditional physical debit cards.
This innovative technology is particularly beneficial for companies with international operations, where conventional methods like physical corporate cards, bank transfers, and out-of-pocket expenses often fall short. As more providers enter the market, it’s clear that virtual cards are meeting the dynamic needs of modern enterprises.
This article explores the impact of virtual cards on business spending in the UK, with a focus on their role in enhancing budgetary control and improving security. We’ll examine how the encryption of virtual card details, unlinked to personal information, provides an extra layer of protection for financial transactions. The growing importance of this technology is evident, with Mordor Intelligence projecting a Compound Annual Growth Rate of 8% for virtual cards in the UK through 2029.
What is a Virtual Card?
A virtual card is a digital representation of a debit or credit card that can be stored on a mobile device. Just like a physical card, it comes with a unique 16-digit card number, verification number, and expiry date. However, unlike a physical card, a virtual card exists only in digital form, making it a convenient and secure option for online transactions.
Virtual cards can be obtained when signing up with digital banks or linked to prepaid accounts. They offer the same functionality as traditional cards but with added security features. For instance, a digital card is essentially a copy of a physical bank card, allowing you to use it for online purchases without exposing your actual card details. On the other hand, disposable virtual cards are designed for single-use, providing an extra layer of protection for one-time transactions.
Types of Virtual Cards
There are several types of virtual cards available, each catering to different needs and preferences:
Virtual Debit Cards
These cards are linked directly to a bank account and can be used for both online and in-store transactions. They offer the convenience of a regular physical debit card but with enhanced security features.
Virtual Credit Cards
These cards come with a credit line and can be used similarly to traditional credit cards. They are ideal for businesses that need to manage expenses without dipping into their bank accounts immediately.
Disposable and Single-Use Virtual Cards
These single-use cards are perfect for one-off purchases. Once the transaction is complete, the card details become invalid, significantly reducing the risk of fraud.
Virtual Prepaid Cards
These cards are preloaded with a specific amount of money and can be used for online and in-store transactions. They are a great option for budgeting and controlling spending.
How does a virtual card work?
This is how the process works step by step:
1. Once you request a virtual card, the card is issued through a bank or financial provider via their website or app, and you will receive the card's unique details - number, expiry date, and CVV code. At this stage, some virtual card providers allow you to set custom rules.
2. In order to make a transaction online, you would enter the details of the virtual card into the payment gateway just as you would with any other card. Your company funds and information are secure, and all information is encrypted. A financial institution must then verify the transaction to determine if funds are available as well as whether its parameters fall within the card's controls and limits. If everything matches, the transaction will be approved, and information will be sent to the merchant without revealing any sensitive information.
3. The payment will be deducted from your account and appear on your statement once it has been processed. Some providers offer disposable virtual cards for one-time use, enhancing security for single transactions.
Why should you use virtual cards for your UK business?
Virtual cards are being used by businesses around the world to facilitate B2B buying, reduce transaction costs, and increase efficiency. Even if your business is located in the UK, you shouldn’t miss out on the opportunity to improve your financial operations.
1. Control of business spending
With virtual cards, you can monitor and control spending in real-time while eliminating the need for repetitive approval processes for every purchase. All this ultimately translates to better and more efficient control of business spending.
2. Enhanced Security Measures
Security is a top concern for businesses today, especially when it comes to financial transactions and online purchases. The advanced security features of virtual cards significantly reduce the risk of fraud and unauthorised use of funds, making them a safer alternative to traditional physical cards.
3. Overcoming Cross-Border Challenges
Your UK business may have subsidiaries in other countries, you may be considering cross-border expansion, or you may simply have clients or suppliers in other countries. In all these scenarios, managing cross-border transactions can be challenging due to volatile exchange rates and costs. Virtual cards can provide a solution to some of these challenges by offering multi-currency support, allowing businesses to conduct transactions in various currencies without incurring significant fees.
Currency Flexibility
Virtual cards can be issued in any currency, giving businesses the flexibility to pay vendors in their local currency and avoid unfavourable exchange rates. A virtual prepaid card can be used for international transactions, providing a secure and convenient payment option. This feature is particularly beneficial for one-off projects in new locations or when setting up operations in a new country. However, for ongoing transactions in multiple currencies, you may still need to consider opening accounts in those currencies to avoid long-term exposure to exchange rate fluctuations.
Cost Savings through Cashback
Certain virtual card providers, such as Fyorin, offer cashback incentives on transactions, which can lead to significant cost savings over time. This can be particularly advantageous for businesses with large recurring expenses, such as fuel costs in logistics or transportation, or subscription services like cloud hosting. By earning cashback, you can effectively free up budget for other critical needs and foster growth.
Managing Virtual Cards
Managing virtual cards is straightforward and can be done through mobile banking apps. These apps provide a range of functionalities that make it easy to control and monitor your virtual cards:
Virtual Cards as a Strategic Tool for CFOs
UK CFOs are increasingly looking for tools that will improve financial control while also helping them grow the business strategically. Many virtual cards offer features that align with the strategic objectives of modern CFOs, such as cash flow management, cost reduction, visibility, and financial risk mitigation.
Improved Cash Flow Management
Virtual card transactions are settled faster than traditional bank transfers, which improves cash flow management. Faster money movement allows CFOs to make more informed financial decisions and allocate resources more efficiently. A physical debit card may be required for certain transactions, such as cash withdrawals.
Lower Transaction Costs
Virtual cards combine the advantages of physical cards, the functionality of checks, and the efficiency of bank transfers like SEPA, ACH, and SWIFT, resulting in lower transaction costs. Savings on transaction fees can accumulate over time and have a positive impact on the bottom line for businesses with frequent or high-volume transactions.
Fraud prevention and risk management
Virtual cards provide advanced security features and greater control over transactions, which are vital for managing financial risks. Cards can be tailored in accordance with a company’s budgets and expense policies, giving CFOs a powerful tool to protect financial assets.
Visibility
With the centralised dashboard providing real-time insights into spending across departments and teams, CFOs can make prompt adjustments to budgets and take proactive measures against potential overspending. This level of visibility is crucial for businesses that want to remain competitive and expand internationally.
Spending Limits and Fees
Virtual cards may come with spending limits and fees, which can vary depending on the provider and type of card. It’s essential to understand these limits and fees to manage your finances effectively. Some common fees associated with virtual cards include:
To avoid unexpected charges, always check the terms and conditions of your virtual card provider. Understanding the spending limits and fees associated with your card will help you make informed financial decisions and optimse your business spending.
Fyorin’s Borderless Virtual Cards
Fyorin empowers international businesses with multi-currency virtual cards that provide efficient expense management, budget control, and cost reduction across borders.
With our virtual cards, our customers typically save approximately €12,000 annually, with additional earnings from the cashback. Are you ready to optimise your global budget management? Reach out to sales@fyorin.com to request your virtual card, or schedule a free demo.
Frequently Asked Questions
Can I get a virtual credit card in the UK?
Yes, you can get both virtual credit and a virtual debit card in the UK. There are many banks and fintech companies offering virtual cards to business. The availability may depend on your credit score and the specific provider's requirements.
What's the difference between a virtual credit and debit card?
The main difference between a virtual debit and credit card in the source of funds. A virtual credit card borrows money from a pre-approved credit line, which you repay later. On the other hand, a virtual debit card takes funds directly from your bank account it's connected to.
Can I use a virtual debit card for all online purchases?
Yes, a virtual debit card can be used for online purchases wherever card payments are accepted. However, ensure that the merchant accepts virtual cards, as some may have restrictions.
How does a virtual card work?
A virtual card works just as a physical card but exists only in digital form. It has a unique card number, expiry date, and CVV. When making an online purchase, you enter these details as you would with a physical card and the funds are drawn from the linked account or credit line, depending on whether it's a debit or a credit card.
Can I have multiple virtual cards at the same time?
Yes, you can have multiple virtual cards active at any one time, depending on the provider's policies. This can be useful for budgeting or managing different spending categories.
Is it safe to use a virtual card?
Yes, using a virtual card is generally safe and secure. Each virtual card has an individual number and can be set with spending limits, reducing the risk of your card being misused. Always ensure you use your virtual debit card on reputable websites.