Virtual Card
A digitally issued card number, often single-use or limited, that works like a normal card payment when a client uses one to pay your invoice.
Definition
A virtual card is a card number issued digitally, with no plastic involved. It carries the usual number, expiry, and security code, but it is often restricted: limited to a single use, capped at an exact amount, locked to one supplier, or set to expire quickly. Companies generate them from their bank or spend-management platform to pay vendors with tighter control than a shared corporate card.
If you invoice larger companies, you will increasingly receive virtual cards as payment. The accounts payable team emails you a card number authorized for exactly your invoice amount, and you charge it through your normal payment processing like any card-not-present transaction. The catch is that virtual cards are usually commercial cards carrying some of the highest interchange rates, so the payer's convenience comes out of your margin.
Why It Matters
Virtual cards cut both ways for small businesses. As a way to get paid, they are fast and final compared to waiting on a check, but the 2.5% to 3.5% processing cost on a commercial card is real money: about $300 on a $10,000 invoice. It is reasonable to ask whether the payer can do ACH instead, or to price the fee into how you quote clients who pay this way.
On the spending side, virtual cards are a cheap safety upgrade for you. Using a single-use or merchant-locked number for software subscriptions and one-off vendors means a compromised number cannot be reused, and cancelling a subscription is as easy as killing the card.
Examples
- 1
A corporate client's AP department emails a single-use virtual card authorized for exactly $8,750; the agency charges it like a normal card and absorbs about $260 in fees.
- 2
A consultant asks an enterprise client to switch from virtual card to ACH for a $20,000 invoice, saving roughly $550 in processing costs.
- 3
A studio pays each of its 12 software subscriptions with a separate virtual card, so one leaked number never exposes the rest.
Related Terms
Quick Navigation
Ready to put this into practice?
InvoiceLaunch automates invoicing with built-in payment terms, late fees, and more.
Get Started