What is a virtual debit card? - TightFist Finance

If you’re often on the move and looking to make life easier, you might be considering getting a virtual debit card. But, what is a virtual debit card?

A virtual debit card is the digital form of your day-to-day debit card. You can use it for online purchases or in-store purchases through a contactless payment system. These debit cards are added to your phone’s payment app and offer an extra layer of security while keeping your pockets empty and your wallet at home.

This article will discuss the pros, cons, and procedures of using a virtual debit card. Let’s dive in and see if this type of card is right for you.

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Why Use a Virtual Debit Card?

Virtual debit cards become more popular each year, and for a good reason. Firstly, you can leave your wallet at home, having easy access to your card straight from your phone.

1. No physical card

You can use a virtual debit card the same way you would a physical card. The main difference is the card is locked away safely in your phone’s virtual wallet. As a bonus, this is also environmentally friendly!

2. Increased card security

You can instantly lock and unlock your virtual card, keeping it secure. Instead of waiting in the mail for a physical card, you can receive an activated and ready-to-use virtual debit card immediately.

Most virtual debit cards offer two-factor authentication steps that protect online purchases and your card number. You can also connect most virtual debit card accounts to your smartphone, allowing you to receive push notifications in real-time about your account activity.

3. Better theft protection

Unlike a physical debit card, virtual cards cannot be stolen, lost, cloned, or copied. If the card is exposed to a shady website or hackers track it, you can quickly delete the virtual debit card and get a new card and number quickly and easily.

4. Widely accepted

Like a physical debit card, you can use a virtual debit card online and make contactless payments in stores through Apple Pay or Google Pay. Some cards even allow you to withdraw money from ATMs. Since virtual debit cards are issued by Mastercard, American Express, and Visa, they are accepted almost anywhere these names are accepted.

5. Great incentives

Some virtual debit cards also offer online discounts on food, shopping, and restaurants. Many offer bonus points you can redeem online, similar to a cashback credit card.

6. Control your debit card settings

These cards even have control features to set transaction limits, monthly limits, and currency types, and plenty of virtual cards are ideal for international transactions.

How to Get a Virtual Debit Card

If you want your own virtual debit card, the first thing to do is to research banking institutions in your state or country. Find out which banks offer virtual cards and match your needs.

Fortunately, most virtual debit cards can be opened for free and have no fees or minimum account limits. Reading reviews will also give you a good idea of the bank’s customer service and how user-friendly the mobile app is.

Once you’ve decided on a bank, you should:

Download the bank’s mobile app through your mobile phone’s app store.
Sign up for the app. Some may require that you fill out an application that can be approved within minutes.
Once inside the bank’s mobile app, select “Add Card.”
If prompted to choose between a physical or virtual debit card, choose the “Virtual Debit Card.”
Select “Virtual Debit Card” if prompted to choose between a virtual card or a disposable virtual card, select “Virtual Debit Card.” The new card will be created within seconds.
Add money to the card by selecting “Add Money.” This can be done through an online transfer from another account.
Depending on your smartphone, add your card to Apple Pay or Google Pay. Once on your Pay app, you can purchase in-store purchases through contactless machines.
Set up any features you want to use in the mobile app, like spending limits, etc.

Using a Virtual Debit Card

There are two ways to use a virtual debit card: online or in-person at stores that accept contactless payments.

To make a purchase online, you should:

Open your bank’s mobile app and select your virtual debit card. This will reveal the card’s number, expiration date, and three-digit security code.
When you make an online purchase, enter the card’s number, expiration date, and security code onto the site as you would when using a physical debit card. Click “purchase,” and the transaction should process immediately.

To purchase in-store:

On your mobile phone and open your mobile payment platform. This could be Apple Pay, Google Pay, Samsung Pay, Fitbit Pay, or Garmin Pay. Select your virtual debit card.
Hold your mobile device near the point-of-sale terminal, usually an inch or so above the scanner, and it will work like a contactless physical debit card. The contactless machine will tell you when the payment has been confirmed.

Best Virtual Debit Cards

Only three brick-and-mortar banks in the US offer virtual debit cards: Citibank, Bank of America, and Capital One, but there are plenty of other online banks you can consider.

US Unlocked is a highly-rated online bank offering a virtual debit card that has the best access to US merchants. It even assigns a US billing and shipping address with the card. This makes it possible to use for specific US services like Netflix US, Hulu, and HBO Max.

The downside is a $50 minimum deposit and a small fee depending on the amount you load onto the card. You can also pay $15 for a lifetime membership fee instead of paying a fee each time you reload the card.

Another top contender is Payoneer’s virtual card which allows you to shop in eCommerce stores and physical merchants that accept MasterCard payments. If you already have a Payoneer account, the virtual card is free and can be received after a quick and easy application. Otherwise, the account fees are $29.95 annually.

Another great choice is the online bank Revolut. This bank is very popular in Europe and has just expanded into the US across all 50 states.

Revolut offers instant, free virtual debit cards from their app, which also has other services like cryptocurrencies, budgeting, and analytics. There are no one-off or monthly charges, and you can get up to 20 virtual cards through their free plan. With a tiered paid plan up to $16.99 a month, you can access up to 200 virtual cards – although most people only need one!

We compared multiple online bank accounts that have instant issue debit cards and voted Revolut #1. However, it’s important to factor in the pros and cons of each account for your financial situation. Make sure you check out our guide on selecting the right virtual debit card for your situation.

Limits of Virtual Debit Cards

The main downside of virtual debit cards is that you can’t use them at places that don’t accept contactless payments. Many stores still use chip or card-swiping machines or only accept cash. Also, some virtual debit cards cannot be used at ATMs if you need cash in a pinch.

Final Thoughts

In today’s world, finance is going paperless as more and more people shop online, use mobile wallets, and choose online banks over brick-and-mortar ones. This trend will likely continue due to the ease and accessibility of online banking since most are free or low-cost and you can receive and cancel cards at the touch of a button.

With the rise of online hackers, virtual debit cards offer a secure payment option, making it easy to manage your purchases and cancel them at a moment’s notice if something suspicious occurs on your account. When it comes to virtual debit cards, the pros far outweigh the cons, making this type of card a great tool to add to your financial portfolio.

TightFist Finance

John is the founder of TightFist Finance and an expert in the field of personal finance. John has studied personal finance for over 10 years and has used his knowledge to pay down debt, grow his investment portfolio, and launch a financial based business. He is committed to sharing content related to personal finance based on his experience in his career, investing, and path towards reaching financial independence.