UNDERSTANDING THE DIFFEREnCES BETWEEN PHYSICAL AND VIRtUAL COMMERICAl CREDIT CARDS 

Commercial credit cards have become an essential tool for businesses of all sizes, providing a convenient and efficient way to manage expenses. However, with the advent of technology, virtual commercial credit cards have emerged as a viable alternative to traditional physical cards. This article explores the differences between physical and virtual commercial credit cards, and explains how each can benefit businesses.

The Difference Between Commercial and Consumer Credit Cards

Before delving into the specifics of physical and virtual commercial credit cards, it’s important to understand the distinction between commercial and consumer credit cards. Commercial credit cards, also known as business or corporate credit cards, are designed specifically for business use. They offer features and benefits tailored to the needs of businesses, such as higher credit limits, expense tracking tools, and rewards programs that cater to business-related expenses.

On the other hand, consumer credit cards are intended for personal use and offer benefits that appeal to individual consumers, such as cash back on grocery purchases, travel rewards, and promotional interest rates. While both types of cards function similarly in terms of making purchases and managing credit, the key differences lie in the features and rewards they offer, which are aligned with the needs of their respective users.

Traditional Physical Commercial Credit Cards

Physical commercial credit cards are the traditional form of credit cards that most of us are
familiar with. These cards are made of plastic or metal and have a tangible presence. They
bear the cardholder’s name, the card number, an expiration date, and a security code.

The main advantages of physical commercial credit cards is they can be used anywhere
that accepts credit cards. This includes merchants that don’t have point-of-sale (POS)
systems that accept Tap-2-Pay. This advantage is fading quickly though, as merchants
understand that to compete, they must accept contactless payments. Globally over 90
percent of merchants accept contactless payment. In some markets such as Asia and
Europe nearly 100 percent of merchants accept contactless payments. In the US over 90
percent of merchants accept contactless payments and experts predict by the end of 2025
over 95 percent of merchants will accept contactless payments.

However, physical cards also come with certain drawbacks. They can be lost, stolen, or
damaged, which can lead to security concerns and potential financial losses. Furthermore,
issuing and distributing physical cards to employees can be time-consuming and may
involve additional administrative overhead. This often leads businesses to issue physical
cards to only employees who are executives or who need to make frequent purchases.

Virtual Commercial Credit Cards

Unlike traditional physical cards, virtual commercial credit cards are entirely digital. They exist only in electronic form and do not have a physical presence. Virtual cards are typically issued through a fintech app that issues cards with the card number, expiration date, and security code needed to make purchases.

How Virtual Cards Work

Virtual commercial credit cards function in much the same way as physical cards, with a few key differences. Just like physical cards, virtual cards can be used for online purchases by entering the card details at checkout. Additionally, virtual cards can be added to digital wallets, such as Apple Pay or Google Pay, enabling contactless payments at point-of-sale terminals.

One of the primary benefits of virtual cards is their enhanced security. Because there is no physical card to be lost or stolen, the risk of fraudulent activity is significantly reduced. Virtual cards can also be issued with specific spending limits and expiration dates, providing businesses with greater control over expenses. Furthermore, virtual cards can be generated instantly, making them an ideal solution for businesses that need to issue cards to employees quickly and efficiently. .

Using Virtual and Physical Cards 

While virtual and physical commercial credit cards differ in form, they share many similarities in terms of usage. Both types of cards can be used to make purchases, whether online or in-person, and both provide businesses with a convenient way to manage expenses.

Online and Contactless Payments

One of the key advantages of virtual cards is their compatibility with digital wallets. By adding a virtual card to a digital wallet, businesses can make contactless payments at point-of-sale terminals known as Tap-2-Pay, just as they would with a physical card. This is particularly useful in today’s increasingly cashless society, where contactless payments are becoming the norm.

For online purchases, virtual cards function exactly like physical cards. The card number, expiration date, and security code are entered at checkout, allowing businesses to complete transactions securely and efficiently. The absence of a physical card does not hinder the ability to make purchases; in fact, it can streamline the process by eliminating the need to carry a physical card.