With advanced security features and beneficial options that help consumers control their spending, virtual cards are a relatively new payment method that has changed the way people manage their finances and approach online transactions.
However, what else is in store for virtual cards? How can this payment method continue to innovate in the future?
What is the current state of fintech?
In 2018, the global fintech market was valued at approximately $127.66 billion. This number is expected to grow to $309.98 billion by the end of 2022.
Analysts attribute this massive increase to the fact that both consumers and businesses around the world are adopting fintech for their financial services. In fact, researchers found that 64% of consumers around the world who actively use digital platforms utilize a minimum of one fintech service.
However, this success doesn't mean every category within fintech is prospering at an equal rate. There is one category, in particular, that is outpacing the others considerably, and it's the same one virtual cards fall in.
Payment products and money transfers
The most successful fintech category is payment products and money transfers. Seventy-five percent of consumers use at least one fintech service in this category, and the most common services used include peer-to-peer payments, in-store mobile payments, and non-bank money transfers.
This desire for better payment products shouldn't be surprising. Consumers are moving toward fintech services for various reasons, including attractive fees, ease of use, more innovative products, and better product features and experiences. It's no wonder then that virtual cards are performing so well, but what exactly have virtual cards achieved?
What virtual cards are currently accomplishing
These days, there's a broader awareness of virtual cards, and consumers— even everyday consumers — are starting to see the value of virtual cards, especially as cybersecurity attacks become the norm, and people seek out secure payment methods in response.
Virtual cards, however, are not limited to just consumers. Even merchants are starting to use them. What was once thought of as a prepaid Visa card, virtual cards are now a payment method that most merchants are happy to accept. What's better is that today's virtual cards — specifically, Privacy's virtual cards — are much more convenient to use.
Previously, if a financial institution offered virtual cards, the customer would have to follow several steps to check out a product. They'd have to complete eight tedious steps such as:
- Log into the bank's app or site
- Type in a one time code to prove it's them
- Click "create a virtual card"
- Copy down the virtual card number
- Go to the tab where they were looking at a product
- Paste in the card number
- Go back to the bank's app or site
- Copy the CVV and then put that into the product's checkout page
At Privacy, we make checking out simple. By implementing our web browser extension, someone can visit a checkout page, and the person will immediately notice that we auto-fill every field with their virtual card information. This reduction in friction plays a considerable role in the rising popularity of virtual cards, and the future of this payment method holds many exciting possibilities as well.
Three predictions for the future of virtual cards
Virtual cards are primed to become increasingly popular over the next few years. However, there are a few specific ways in which our team believes this payment method will increase in popularity.
1. Virtual cards will become first-class payment instruments
Eventually, people will only have one or two physical payment cards. Consumers might use Apple Pay or Android Pay as well, but because virtual cards offer so many benefits, consumers will start to have an array of digital processors. Pretty soon, people will even have a tool that they can use to create virtual cards whenever they'd like.
2. Businesses will start to adopt virtual cards
Right now, virtual cards are a consumer finance product. However, they offer a great way to control access to corporate funds. While it's not commonly known, businesses actually have higher liabilities than consumers. Most legislation that limits personal liability are consumer protection laws, but those laws don't apply to brands, which makes it critical for companies to protect their corporate funds.
Virtual cards can be created with parameters, limits, and restrictions, allowing business owners and managers to pass around their company card without any risk. The set guidelines on virtual cards reduce the chances of company funds falling into the wrong hands or unnecessary expenses racking up because of employees. Small to medium-sized businesses find that our team subscription plan, for example, limits a lot of financial distress for decision-makers.
3. The competition will heat up, but the future is bright
Virtual cards fall into the leading fintech category for a reason: they're easy to use, secure, and efficient. As consumers and businesses begin to utilize virtual cards, the fintech industry is going to see more players enter the space. However, this will only challenge businesses to continue improving and pushing boundaries, ultimately bringing virtual cards to a wide-scale acceptance from both consumers and businesses alike.
What do you think is the future of virtual cards? Tell us your predictions on Twitter (@PrivacyHQ) to share your thoughts.