A new study from Juniper Research has found the number of virtual card transactions will exceed 121 billion globally by 2027; increasing from 28 billion in 2022. This represents a growth of 340%. It predicts the rising integration of virtual cards into existing digital wallet services, such as Apple Pay and Google Pay, will drive this growth by exploiting the existing substantial user bases of these digital wallets.

Virtual cards are a payment tool that works in much the same way as a traditional credit card. They generally have a 16-digit card number, an expiry date, and a CVV number. The distinction between virtual cards and traditional cards is the inherent security provided by a virtual card. A virtual card’s number is randomly generated and can be unique for each payment made. Furthermore, virtual card details will be different to the payment source, which is usually a traditional card or digital wallet, meaning that if the virtual card details were stolen, they would not provide access to the user’s money. This makes the primary function of a virtual card a form of online security.

The application of virtual cards, in the view of Juniper Research, is underutilized. Virtual cards are growing in the range of uses and popularity, but there are still areas of the economy that are yet to fully embrace the benefits. Virtual cards are popular among B2B travel purchasing and fleet management but offer great potential in financial markets and the AP (Accounts Payable) sector. Virtual cards are also growing in the consumer market as an anti-fraud measure.

Virtual Cards Key to Providing Secure & Convenient Mobile Payments

The research found that the global number of virtual card transactions through mobile payment methods will grow from 5 billion in 2022 to 53 billion in 2027, as the adoption of virtual cards in contactless payments accelerates. It identified the inclusion of virtual cards as a key market driver of consumer adoption of contactless payments in rapidly developing economies, such as India. This allows them to meet market demand for convenient payment options during checkout amongst unbanked populations.

Virtual cards face tough competition from other payment methods, such as traditional contactless cards and QR codes. However, the report anticipates that the secure nature of virtual cards will drive demand in an increasingly security-conscious market.

Benefits of Virtual Cards virtual card

There are several benefits to virtual cards:

• The most prominent is security. The nature of virtual cards makes them a more secure way to make payments than traditional methods. The addition of other security features and spending control makes it a very safe way to make online payments.

• Over the COVID-19 pandemic, online payments increased substantially across the globe. Both B2B and B2C payments moved primarily online and even after the ending of lockdowns, many transactions remained online. With this increase in online transactions came an increase in online fraud, targeting both consumers and businesses. Virtual cards offer significant protection from fraud attempts as demonstrated by the fact that 66% of companies paying by check experienced real or attempted fraud, compared to 34% using ACH debits, and just 3% using virtual cards.
• Another benefit of virtual cards is the seamless nature of the payments. Most B2B payments in the US are still made by cheque, this is a slow process, as it requires the physical movement of the cheque form a business to the bank. Added to this is the sheer volume of payments many banks need to process.
• A traditional paper-based cheque can take up to six days to process, and even with modern cheque imaging methods, the process takes at least until the next working day. With virtual cards, this process is almost instantaneous.

• Another advantage is control over use. This does not just provide security, but it allows for a company to issue the card to a new employee for expenses without fearing either accidental or deliberate misuse. This can be done through a combination of time limits, spending limits and restricting the card to only making payments at the appropriate vendor.
• It also allows for greater budgeting, as the card can be limited to only spending the amount budgeted for. The greater data provided by a virtual card also allows for a more detailed retrospective analysis of spending to inform future spending plans.
• Some virtual card providers offer incentives for the use of their virtual cards. This can come in many forms, including fee rebates, reward points and cashback on spending. Where virtual cards are linked to reward credit cards, some issuers carry the credit card rewards over to the virtual cards.
• Another common reward is a new user reward. These are unique rewards, usually full transaction fee rebates, for new users of the card. This is used to entice those who would not otherwise use a virtual card. It is common that even once the beginner offer expires the user will continue with the virtual card.

The US to Represent the Largest Market for Business Virtual Card Transactions virtual card

Additionally, the report forecasts that the US will account for $71 billion in B2B virtual card revenue by 2027; representing 72% of global revenue. It predicts that the growing use of virtual cards in the healthcare sector will be key to driving this growth, with virtual cards increasingly used to pay for supplies and equipment due to the speed of transactions and inherent security of this payment method.

In response, it encourages virtual card vendors to offer integration with accounts-payable software, such as MineralTree and WEX, to streamline the payment process undertaken by major US healthcare providers.

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