What is a virtual card? How they work & benefits for your business

Key takeaways

• A virtual card is a digital payment method that works like a physical credit or debit card, but it exists entirely online, with its own card number, expiry date, and security code.

• Virtual cards come in single-use and multi-use types, offer spending controls, provide real-time expense tracking, and can be created, frozen, or cancelled instantly.

• Airwallex lets you issue multi-currency virtual Corporate Cards with 0% foreign transaction fees, instant creation, built-in spending controls, and direct integration with accounting software like Xero.

Digital payments have become the norm for Australian businesses. In 2025, more than 1.4 billion payments were made via mobile wallets, totalling over A$321 billion.¹ At the same time, cash withdrawals have dropped from around A$120 billion per month in the last half of 2018 to around A$80 billion in the last half of 2025.² For businesses, this shift goes beyond how customers pay. It's also changing how companies manage their own spending. Virtual cards have become a practical way to control expenses, reduce fraud risk, and simplify financial operations across teams and currencies.

In this guide, we'll walk through how virtual cards work, the different types available, their benefits and limitations, and how to tell if they're right for your business.

What is a virtual card?

A virtual card is a digital payment method that works just like a physical credit or debit card, but without the physical card. It has all the same details, card number, expiry date, and CVV, but you'll never need to carry or replace a piece of plastic. The practical benefit is simple. You can create, use, and cancel cards instantly, without waiting for anything to arrive in the post.

Virtual cards are created through a card issuing process by financial service providers such as Airwallex. When you create one, you get a unique set of card details through your provider's online platform or mobile app. Those details exist only in digital form, but they work anywhere a regular card would for online transactions.

It's also worth knowing that a virtual card isn't the same as a digital wallet. A digital wallet like Apple Pay or Google Pay is the app that stores your virtual card, just like a physical wallet holds your plastic cards. You can add a virtual card to Apple Pay or Google Pay for in-store tap-to-pay purchases, which gives you the option to use it both online and in person.

The main difference between virtual and physical cards comes down to security and flexibility. You can create multiple virtual cards for different purposes, set specific spending limits for each card, restrict transactions to certain merchant categories, and instantly freeze or cancel cards when needed. That's why virtual cards are especially useful for businesses managing multiple expenses, vendors, or team members. So, how does the payment process work? Here's a step-by-step breakdown.

How do virtual cards work?

Each virtual card has its own unique card number that links back to your main account or funding source. You can create multiple virtual cards and use them to transact in various currencies using funds available in your account. Some providers also offer extra features, like setting transaction limits or creating disposable cards that automatically expire after the intended payment's been made.

Now, let's take a closer look at how virtual cards work:

1. Card creation: Users can create a virtual card through their bank or financial provider's website. They'll get their virtual card details, including a unique card number, expiry date, and security code. During this process, they may also have the option to set specific spending limits or card expiration dates for added control.

2. Transaction: When making a purchase, the virtual card details are entered just like those of a traditional card. Your details are encrypted and sent through a secure payment gateway, so your financial information stays protected.

3. Authorisation: Your bank or financial provider then checks the transaction, making sure there are enough funds available and that the payment fits within any set limits. Approval is sent back to the merchant without revealing any sensitive account information.

4. Completion: The purchase amount is deducted from your account, and the vendor gets paid. The transaction appears on your statement, linked to the virtual card number, which makes it easy to track and manage.

The whole process takes seconds. You get immediate purchasing power and strong security at every step. Now that you know how it works, let's look at the different types of virtual cards you can choose from.

Watch: How virtual cards work

Types of virtual cards: Single-use vs. multi-use

Not all virtual cards work the same way. The two main types, single-use and multi-use, are meant for different jobs, and knowing the difference helps you choose the right one for each situation.

Single-use virtual cards

A single-use virtual card generates a card number for one transaction only. Once the payment clears, that number expires and can't be used again. Think of it like a disposable phone number you give out once and never use again.

This type is ideal for one-off purchases where you don't want to share a reusable card number. If you're paying a freelancer for a one-off project, for example, a single-use card means that number can't be used again after the payment clears. It's also useful for purchases from unfamiliar vendors where you'd prefer an extra layer of protection.

Multi-use virtual cards

A multi-use virtual card works like a regular card and can be used for ongoing transactions. It's more like your regular phone number, one you keep and use for ongoing relationships.

Multi-use cards are best for recurring payments like SaaS subscriptions, regular supplier invoices, or employee spending. You might assign a multi-use card to your marketing team's ad platform so monthly charges are automatically tracked under one card, making reconciliation simple and keeping your spending organised by category or vendor.

Benefits of virtual cards for businesses

If you're managing a growing team with expenses across multiple currencies and vendors, virtual cards can make a real difference.

Instant creation and multi-currency support

Virtual cards are easy to set up and use, and you can create multiple cards for different purposes.

• Instant card creation: Businesses can issue virtual cards to new employees, contractors, or for one-off purchases through their provider's online platform. Cards can be created in real time, giving immediate purchasing power whenever it's needed. No application forms. No waiting for cards in the post.

• Multi-currency cards: Virtual cards can be used for transactions in multiple currencies, usually without incurring any foreign transaction fee. That gives businesses a flexible payment option for global purchasing needs, including paying for digital ad spending and SaaS subscriptions in currencies other than AUD or USD.

Stronger security and fraud protection

Virtual cards come with several security features that help reduce fraud risk during transactions:

• Freeze or cancel instantly: If there's a fraudulent attempt or a card is no longer needed, you can deactivate the virtual card immediately without affecting your primary account or other cards. If an employee's card details are compromised, you can freeze that card straight away without affecting any other cards on the account.

• Can't be lost or stolen: Because virtual cards exist only in digital form, they can't be physically lost or stolen like traditional corporate cards. That means no replacements and no potential losses while you're waiting for a new physical card.

• Real-time spend tracking: With virtual cards, businesses can track expenses in real time through online platforms or mobile apps. So if something looks suspicious, you can spot it immediately and act quickly.

Simpler expense management

Virtual cards give you greater control over company spending, which can save both time and money. The centralised data and real-time tracking also give you a clearer view of your expenses.

• Simplified reconciliation: Virtual cards are linked to a central account, so all transactions are recorded in one place through real-time tracking. That removes the need for manual record-keeping and reconciling multiple credit card statements. Generating expense reports becomes a quick process with a few clicks.

• Automated categorisation: Virtual cards can automatically categorise expenses by category – such as business travel, ad spending, and events. That makes it easier to spot where you're overspending and adjust budgets accordingly.

• Accounting software integration: Many virtual card providers offer integration with popular accounting software like Xero, making it even easier to simplify your financials.

• Multi-step approval workflows: You can set up multi-step approval workflows with Expense Management so every transaction is properly approved before it goes through.

• No more expense reimbursements: By assigning virtual cards to employees, companies remove the need for expense reimbursements, so there's no more paying out of pocket and submitting reports later. 

Lower fees and recurring vendor payments

Many virtual cards don't charge annual or transaction fees, which can make them a more cost-effective option. With Airwallex, businesses can create virtual cards and spend in multiple currencies with no domestic or international transaction fees and no hidden charges.

Virtual cards are also used for managing recurring vendor payments:

• Dedicated cards for each supplier: Assign a dedicated virtual card to each recurring supplier so you can track and manage ongoing expenses without mixing them together.

• Automatic payment controls: Set automatic payment controls for each vendor relationship, making sure payments are processed on time without manual intervention. That removes the risk of missed payments and late fees.

• Centralised monitoring: Monitor all recurring transactions from a single dashboard, giving you better visibility for security purposes, convenience, and detailed spending analysis. This approach helps you keep tighter control over subscription services, software licences, and other regular payments whilst also simplifying reconciliation and budgeting.

Limitations of virtual cards

Virtual cards aren't the right fit for every situation. Here are a few things to keep in mind.

In-person and cash transactions

Virtual cards can't be used at ATMs to withdraw cash. They're designed for electronic transactions only. For in-store purchases, you'll need to add the card to a digital wallet like Apple Pay or Google Pay first, then tap to pay at any terminal that accepts contactless payments. Not every merchant supports tap-to-pay, so this won't work everywhere.

Merchant acceptance and connectivity

Some vendors, especially smaller or offline-only businesses, may not accept virtual card details for online payments. You also need internet or device access to retrieve your card details when you need them.

Even with these limitations, virtual cards are still a strong option for most businesses. So, here's how to decide if they're right for yours.

Should you use a virtual card for your business?

If you want to cut fraud risk, track spending more easily, or get better control over business expenses, virtual cards are worth considering. Here are the situations where they make the most sense:

• International transactions: If your business often incurs expenses in foreign currencies through international payments or travel, virtual cards present a cost-saving opportunity. Many virtual cards are multi-currency, and if paired with a Global Account can draw on held currencies in your account to avoid forced conversion. 

• Scaling teams and expenses: As your team grows and the volume of expenses increases, managing manual reimbursements becomes harder. Virtual cards can be quickly issued and managed for new hires, different departments, or specific projects, without complex administrative procedures.

• Recurring payments and subscriptions: If your business has regular monthly expenses such as software subscriptions, you can set up recurring payments using virtual cards to ensure timely payments and avoid late fees. You can also dedicate virtual cards to specific vendors or departmental functions to simplify budgeting.

• Tighter financial controls: Virtual cards offer real-time visibility and control over business expenditures, letting you track expenses accurately. With customisable spending limits at the transaction level, you can help ensure responsible spending practices across your organisation.

How you can take control of team spending with Airwallex Corporate Cards

If you're looking for virtual cards that work across currencies and give you real control over team spending, our Corporate Cards are built for exactly that.

• Multi-currency virtual cards: Transact in multiple currencies and pay from held balances in your Global Account. 

• Instant creation: Issue virtual cards to employees, contractors, or projects in 60+ countries. 

• Built-in spending controls: Set spending limits and merchant restrictions for each card, giving every team clear visibility into their budget.

• Real-time monitoring: Track all expenses as they happen, and freeze or cancel any card instantly.

• Xero integration: Connect directly with your accounting software to simplify reconciliation.

Frequently asked questions

Are virtual cards safe?

Yes, virtual cards are generally safer than physical cards because you can generate a unique card number for each transaction or merchant. Most virtual cards also come with customisable spending limits and expiry dates, and they can be locked or deleted instantly. Even if a virtual card's details are compromised, the risk of financial loss is minimised because you can freeze that specific card without affecting others.

Can I withdraw cash from a virtual card?

No, virtual cards are designed for electronic transactions and can't be used at ATMs. Some providers let you transfer funds from a virtual card to a linked account, which can then be accessed using a physical card to withdraw cash.

What are the disadvantages of a virtual card?

The main limitations are that you can't use them at ATMs, some merchants may not accept them for in-person purchases without a digital wallet, and you need internet access to retrieve card details. For most business spending, these limitations rarely come into play.

How do I freeze or cancel a virtual card?

You can freeze or cancel a virtual card immediately through your provider's online dashboard or mobile app. With Airwallex, you go to your card details page, select "Manage card," and choose either the freeze or cancel option. The card stops working instantly, and if you need a replacement, you can generate a new virtual card straight away.

What is the point of a virtual card?

Virtual cards give you a fast, secure way to pay online without sharing your primary account details. For businesses, they also give you spending controls, real-time expense tracking, and the ability to issue cards instantly to team members or for specific purposes.

Sources

1. https://www.ausbanking.org.au/insight/mobile-wallet-usage/

2. https://www.ausbanking.org.au/insight/australians-are-withdrawing-less-cash/

This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) read the Product Disclosure Statement (PDS) for the Direct Services available here.