Guide to Virtual Cards: Benefits, Types, Top Picks & more

There are mainly 2 types of virtual cards available for the consumers – virtual credit cards and virtual debit cards.

Virtual Credit Cards

Like physical credit cards, virtual credit cards also come with a predefined credit limit and can be used for online payments. If issued on the RuPay network, they can also be used for UPI transactions, similar to any RuPay credit card. Some virtual credit cards are standalone products, while others are issued as additional cards linked to your existing physical credit card.

For example, HDFC UPI Rupay Credit Card is offered as a separate card whereas the Rupay variant of YES Bank Paisabazaar PaisaSave Credit Card is offered as an additional virtual card.

Virtual Debit Cards

Virtual debit cards can be used for online transactions by filling in the required card details and the payment amount is deducted directly from the bank account, similar to a physical debit card. Here is the list of some of the virtual debits cards in India:

Using virtual cards for your payments comes with several advantages. Here are some key benefits you can avail:

Hassle-free Digital Payments: You can easily access your virtual card details using your mobile phone through online banking or wallet apps for quick online purchases and bill payments. Digital cards let you carry out quick and contactless online transactions without the hassle of carrying a physical card or swiping it to make any payment.

Instant Issuance: Most card issuers offer instant virtual card issuance, unlike regular cards, which may take several days to reach you. You can quickly generate, activate and manage your virtual cards through user-friendly digital interfaces.

Enhanced Online Security: Since these are not available in physical form, virtual cards are comparatively more secure from physical theft. Many virtual cards also offer the option of using a masked or temporary card number to protect your account details from any potential online frauds and threats.

Rewards on Spends: You can earn rewards or cashback and even avail other offers on leading brands and platforms on virtual card spends, basis card features and eligibility. For example, UPI transactions made through YES Bank Paisabazaar PaisaSave Credit Card earn 1.5% cashback. Similarly, if a merchant is running an offer on HDFC Bank Credit Cards, it will likely be applicable on HDFC UPI Rupay Virtual Card as well.

Low Annual Fee: Virtual cards are generally either lifetime free or come with a low annual fee.

Also Check: Best Rewards Credit Cards

Listed below are the key differences between virtual cards and regular physical cards:

Virtual cards function in a similar manner as regular physical cards, but only for online or UPI payments.

For Online Payments

Step 1: Select the card payment method during the online checkout and payment process.
Step 2: Enter your virtual card details like card number, CVV and expiration date, as displayed on the card issuer platform.
Step 3: Complete the transaction which may require you to enter an OTP sent to the registered mobile number for added security.

For UPI Payments

All virtual debit cards can be linked to any UPI platform of choice and be used to make the payments. However, only virtual credit cards on RuPay network can be used for UPI payments by adding them to the UPI platforms.

Like physical credit cards, the eligibility criteria for virtual credit cards vary depending on the card issuer, card type and other internal policies of the provider. Since most virtual credit cards are offered on your existing credit card account, the approval is easy. Even if you apply for a standalone virtual credit card, the eligibility criteria would be easy, as most virtual cards are entry-level.

Documents Required

If you have an existing card on which you have been offered a virtual card or a pre-approved offer, you may not have to submit any documents. However, if you do not any such offer, you may be required to submit KYC documents like PAN Card, Aadhaar Card and income proof like bank statement or salary slip.

If you have a virtual credit card offer on your existing physical credit card, you will not have to follow any application process. You can just accept the offer and provide consent via OTP and your virtual card will be generated.

However, you can also apply for a virtual credit card through the respective bank’s website. While the process may slightly vary across issuers, the general steps remain the same, as shown below:

Step 1: Visit the issuer’s website and navigate to the Credit Cards section

Step 2: Choose the virtual card and click on Apply Now

Step 3: Enter your mobile number and verify with OTP

Step 4: Enter your name, address and additional details as required

Step 5: Upload documents, if required

If your application is approved, you will get the card details on your email and registered mobile number within a few minutes. You can activate and set up your card through the issuer’s internet banking or mobile app, and start using your card for payments.

Here are a few things to note before you accept a virtual card offer on your existing card or apply for a standalone virtual card:

Credit Limit: You should check if the virtual card is being offered with additional limit or if it shares the same limit as your primary credit card. Some issuers also allow you to set a custom spending cap on the virtual card for safety.

Usage Restrictions: You can use your virtual card for online and app-based transactions. If your card is on RuPay network, you can use it to make UPI transactions by scanning the QR code at stores. However, they cannot be used at offline POS machines in traditional ways. Check all restrictions before relying on it.

Reward Points & Benefits: Transactions on virtual cards may earn the same rewards as the primary credit card or they may come with a completely different reward structure.

Security Benefits: Since card details are masked and temporary, it reduces the risk of fraud. Always enable/disable international and contactless usage based on need.

What are the charges for a virtual credit card?
Typically, banks offer virtual credit cards either lifetime free or at a nominal fee. However, it’s best to check with the card issuer for such charges.

Can I use a virtual credit card for international transactions?
Yes, in most cases, virtual credit cards can be used for international online transactions, provided your primary credit card allows international usage.

What happens if a transaction with my virtual card fails?
If a transaction fails, check your internet connection, ensure you have entered the correct virtual card details, and verify that you have not exceeded any spending limits you might have set. If the issue persists, contact your bank.

Can I set spending limits on my virtual credit card?
Yes, many banks allow you to set custom spending limits for each virtual card generated, providing better control over your online expenses.

Can add-on credit cardholders get a virtual credit card?
No, only primary cardholders can apply for a virtual credit card on their existing card.

What should I do if I suspect fraudulent activity on my digital credit card?
In case of suspected fraud, you must report the same to your issuing bank by calling their customer support team. You can also temporarily block the card through the issuer’s app.

Do virtual credit cards affect my credit score?
Yes. If you do not pay your virtual credit card bills on time, it will negatively impact your credit score. Similarly, timely payment and responsible usage will improve your score.