September 7, 2023

Virtual credit cards: a guide for your business

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Sept. 28th, 1 PM ET/ 10 AM PT

Earlier this year, the Census Bureau reported that over $272 billion of retail sales in the first quarter of 2023 were completed online. This represented over 15% of all retail sales in the quarter. With this volume of online transactions, a growing number of small business owners have started asking themselves if physical cards are necessary anymore. More importantly, if virtual cards are a practical alternative.

How can you decide if virtual cards make sense for your business? We’ll unpack the differences between virtual and physical cards and a few best practices for issuing them to your team. However, before we do that, let’s discuss a virtual card’s basic mechanics. 

What is a virtual card?

A virtual card is a form of payment that is nearly identical to having a physical card. It gives the user a 16-digit number, a CVV security code, and an expiry date, allowing them to make online purchases just as they would with a physical card.

Virtual cards are stored and encrypted in digital wallets, offering a security layer that physical cards can’t provide. When you use a virtual card to make a purchase, your digital wallet generates a unique 16-digit code to be used only for that purchase. These are just two of many differences between virtual cards and physical cards—and the rest are worth exploring in more detail.

How to use a virtual card for business

Small businesses leverage virtual cards for several reasons, including:

  • Paying vendors. Virtual cards empower employees to pay vendors faster than they’re able to via more traditional payment methods, including wire transfers or handwritten checks. 
  • Tracking spending. Virtual card companies offer software that enables businesses to track spending across the company accurately. Ramp’s Vendor Management platform, for example, gives you a holistic view of your spend on a per-vendor basis, which enables you to discover pricing insights that save you time and money. 
  • Automatically manage budgets. Virtual cards like Ramp also allow you to set strict rules around purchase categories and budgets, eliminating significant manual work for your Finance team. 

Differences between virtual cards and physical cards

Since virtual and physical cards have different (and valid) use cases, businesses choose to issue both types of cards to employees. Here are just a few examples of the advantages each one offers—and why you might select virtual cards over physical (and vice versa).

Physical cards

Physical cards can be used in-store or online with any credit card merchant. They can also be added to your Apple or Google Pay account. Unlike a virtual card, you don’t need to add a physical card to a virtual wallet in order to use it. 

However, each employee can only have one physical card active. In most cases, administrators do not have the option to transfer cards between employees, and you cannot order a physical version of an existing virtual card. 

Virtual cards

Administrators can issue unlimited virtual cards at any time. Virtual cards can also be transferred among employees or terminated whenever necessary. As we discussed earlier, business owners can leverage virtual cards for online purchases, including advertising expenses and recurring SaaS subscription fees.

Much like a physical card, you can add your virtual card to Apple Pay or Google Pay for in-store purchases at stores that accept those forms of payment. However, virtual cards cannot be used at physical retail locations that don’t participate in either program.

Although you can issue as many virtual cards as you wish, it’s important to resist the temptation to do so without some guardrails in place. Let’s review a few best practices for issuing virtual cards.

Pros and cons of using virtual cards

Although there are several advantages to using virtual cards, it’s important to be aware of some of the potential pitfalls before you start issuing them to employees. Here’s a quick rundown of the pros and cons of using virtual cards.


  • Increased security. Virtual cards are encrypted, which gives you another layer of protection against potential hackers. For example, Ramp undergoes a steady cadence of audits to ensure SOC2 and PCI compliance.
  • Ease of use. Administrators can do so with just a few clicks online if you need to cancel or replace a virtual card. This action removes any links to the previous and/or lost card. 
  • Granular spend control. Admins can set restrictions based on spend amounts and purchase categories, which are then automatically enforced by the virtual card company’s software. 


  • (Mostly) limited to online purchases. Most virtual cards can only be used online or with retailers that accept Apple or Google Pay. However, Ramp’s Card Limits feature allows you to link a physical card to a virtual card and reimburse against it. 
  • More complicated refund processes. In some cases where your virtual card isn’t linked to a bank account, vendors may be forced to issue refunds via an exchange or store credit. 
  • Increased difficulty making reservations. Employees may encounter issues when they need a virtual card to book a flight, rental car, or hotel. These companies tend to request a physical card to hold a reservation, so card holders may need to call your virtual card company to complete the transaction.  

Best practices for issuing virtual cards

Use one virtual card per vendor

As a best practice, we recommend using one virtual card per vendor for several reasons, including:

  • Security: When a vendor’s website security is compromised, your potential risk is limited to just that vendor. Additionally, you can lock your virtual card for just that vendor without blocking additional recurring spend.
  • Accounting: Virtual cards like Ramp allow you to create merchant and card-level rules to code transactions from specific vendors. Doing so on a one-card-per-vendor basis makes it easier for your accounting team to stay organized.
  • Flexibility: Ability to reassign cards easily to different owners as you hire and scale your team

Define spend categories and limits for virtual cards

Many virtual cards allow administrators to put guardrails around approved purchase categories and amounts. For example, Ramp’s virtual card offers spend limits that can be as broad or granular as you like. 


In the screenshot above, you can drill down to the day, time, vendor, and transaction amount. Administrators can create as many guidelines as they need for each expense category, giving you a unique level of control that enables you to enforce the rules of your virtual card policy automatically.

Choose the right virtual card for your business

Many virtual cards have the same limitations. They can’t be used at physical locations unless those retailers accept Apple or Google Pay, and you can’t order physical versions of a virtual card. However, this isn’t the case with all virtual card companies. In addition to spend management controls, the Ramp card includes a feature called Card Limits, which allows you to link a physical card to any virtual card limit and reimburse against it.


With Ramp Card Limits, users can:

  • ‍Link any virtual card limit to a physical card. Controls created for the virtual card are automatically applied to the physical card.
  • Assign a reimbursement towards a virtual card limit. 
  • Ma​​nage spend programs at scale while automatically classifying transactions.
  • Transact on the go and swap card limits for transactions made on your physical card.

Save time and money with the Ramp card

Ramp offers both virtual and physical cards that give administrators the control they need while empowering employees to make necessary work-related purchases. In addition to the guardrails you can put in place, the Ramp card gives you full visibility into spending across your business and enables you to scale quickly with higher limits that meet your needs today and in the future.

Want to learn more about how the Ramp virtual card can jumpstart your business? Click here to get started.

Vice President of Product, Ramp

Geoff Charles is the VP of Product at Ramp, leading the product management, operations, and support teams. He has been working in financial services for over a decade across B2B and B2C. Prior to Ramp, Geoff helped spin off Mission Lane and scaled credit products to millions of consumers. He started his career advising Fortune 100 financial services companies and is now focused on building better software to disrupt them.

Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.



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