Often, when switching from archaic to modern technology, an unintentional gap is left behind. This gap is usually a slight discomfort that the nature of the old ways of doing things solved. After some time of feeling the friction of the newly found gap, modern technology creates an add-on to solve the problem we weren’t aware of at first. An example of such a technology is the virtual card. You may have questions such as, “what is a virtual card, and how is a virtual card different.”
What is a virtual card?
In the past, we primarily used cash. When you create a budget, you will put all your money in individual envelopes so you can keep track of where your money for each budgeted thing is allocated.. If you wanted to pay someone monthly, they would have access to an envelope out of which they could take their wages. At the end of the day when you review, you would choose how much money you put in the envelope, and you likely only “gave them access” to what was theirs.
In the analogy above, if you understand the value of having an envelope instead of all your cash in one place, you cracked the “virtual card meaning” code. Here is the updated version with virtual cards in place of envelope:
When you create a budget, you can now put all your money in individual virtual cards to keep track of where your money is. If you wanted to pay someone monthly (i.e., A subscription off your bank account), they would have access to a virtual card out of which they could take their’ wages.’ At the end of the day, you choose how much money you put in the virtual card, and you likely only “give them access” to what was theirs.
How is a virtual card different from a regular card?
Every card has a unique number on it. This, combined with the CVC and expiration date, is enough information for someone to use a card to make online purchases. A virtual card is like an additional bank account. The card has its own funds, similar to the Nedbank pocket, but attached to each of these accounts is a unique bank card that can be used virtually to make purchases out of the account.
How is this different from a regular bank account where you just lost the card? You don’t need to go to the bank to create a virtual card, which means you can create and destroy cards on demand. Therefore, Your Spotify and Netflix subscription can both have their own “bank accounts” if that’s what you want.
Who offers virtual cards?
Many people often use virtual cards. If you have been looking for banks that have been actively pushing their virtual cards, check out virtual card FNB and virtual card Capitec.
Although, FNB and Capitec are not the only banks that offer virtual cards. Here is a list of some of the other banks that provide virtual cards:
There is:
- an FNB virtual card,
- a Capitec Virtual Card,
- A Postbank Virtual Card (Postbank is the bank that deals with the pensions funds from SASSA),
- a Nedbank Virtual Card (which Nedbank users might think of as “pockets” with cards.)
- an ABSA virtual card is also often referred to as Virtual Pay. Virtual Pay is especially handy for corporate travel.
The steps for using Virtual Pay for travel are as follows:
Step 1
An authorized individual or travel agent produces a Virtual Credit Number (VCN) for each journey step for the travel itinerary.
Step 2
VCNs are given to suppliers (airlines, hotels, and vehicle rental firms).
Step 3
When the traveller starts that section of the journey, the supplier is paid (for example, picking up the car).
Step 4
As cash management improves, reconciliation becomes easier.
*Virtual Pay can be used for both domestic and international travel expenses.
Although not every bank has a dedicated video like FNB does explain “how to use FNB virtual card.” Which makes understanding and setting up a virtual card so easy even grandma could nail it!
Where can you use virtual cards?
Being able to differentiate your “mini account” and your main account is the primary advantage of a virtual card. This has many benefits, such as added safety when signing up for online websites. The only money that can be taken from the card is the money you choose to put in it. If it is a scam or something, you can simply cancel the card and create a new one. Your whole account isn’t in danger.
This can be used exceptionally well when you have to sign up for a free trial using your credit card, as now you can sign up with a card that doesn’t have money allocated to it.
Virtual cards can be used primarily for the same reason you have more than one physical card. To keep separate money separate. Although what’s excellent about virtual cards is their fees, or rather, their lack thereof.