What is a virtual card? How it works and top options for Hong Kong SMEs

Key takeaway:

• What is a virtual card? A virtual card is essentially a digital version of a physical credit or debit card, designed exclusively for online transactions and enhancing security measures.

• How do virtual cards work? Virtual cards use technology to create unique card numbers for secure online payments, keeping your main account details private.

• How to get a virtual card? Virtual cards can be created online through banks and other financial institutions such as Airwallex.

• Are virtual cards safe? Virtual cards offer enhanced security features including the ability to set spending limits and restrict transactions by the type of merchant, and the capacity to instantly freeze or cancel the cards.

What is a virtual card?

A virtual card is similar to a traditional credit or debit card but exists solely in a digital format. It is primarily used for online purchases and subscription services, offering a convenient and secure alternative to physical payment methods.This comprehensive guide will analyse what is a virtual card, contrast digital issuance with traditional paper-heavy banking methods, and present an objective look at corporate pros and cons. Finally, discover how the Airwallex credit card assists enterprises in streamlining your company’s finances.

How do virtual cards work?

Each virtual card has its unique card number that links back to your main bank account or funding source. You can create multiple virtual cards and use them in different currencies. Some providers also let you set spending limits or create disposable cards.

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 will receive their virtual card details including a card number, expiry date, and security code. They may have the option to set spending limits.

2. Transaction: When making a purchase, the virtual card details are entered just like those of a traditional card. The transaction is encrypted and processed through secure payment gateways.

3. Authorisation: Your bank or financial provider then verifies the transaction, ensuring adequate funds are available. Approval is signalled back to the merchant without revealing any sensitive account information.

4. Completion: The purchase amount is deducted from your account, and the vendor receives payment. The transaction appears on your statement, linked to the virtual card number, allowing for easy tracking.

Why use a virtual card in Hong Kong?

Virtual cards provide a convenient and safe way to make online transactions. Here are a few reasons why businesses should consider using them:

Ease of use

Virtual cards are easy to set up and use, with the ability to create multiple cards for different purposes.

• Instant card creation: Businesses can easily issue virtual cards to new employees, contractors, or one-off purchases through their bank or financial provider's online platform. Virtual cards can be created in real-time, providing businesses with immediate purchasing power whenever needed.

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

Enhanced security

Virtual cards offer the following security features to reduce fraud risk during transactions:

• Freeze or cancel virtual cards: In the event of a fraudulent attempt or if a card is no longer needed, businesses can swiftly deactivate the unwanted virtual card without affecting their primary account or other virtual cards.

• Virtual cards cannot be lost or stolen: As virtual cards exist only in the digital space, they cannot be physically lost or stolen like traditional corporate cards.

• Transaction limits: Virtual cards can have a predefined spending limit to avoid overspending or unauthorised transactions. Additionally, businesses can limit transactions using the virtual card to only certain types of merchants.

• Real-time spend tracking: With virtual cards, businesses can track their expenses in real-time through online platforms or mobile apps. This allows for immediate identification of suspicious transactions.

• Multi-layer approval workflows: You can set up multi-layer approval workflows for expense management software to ensure virtual card transactions are thoroughly authorised.

Improved expense management

Virtual cards facilitate greater control over managing company spending, resulting in time and cost savings for businesses.

• Simplified reconciliation: Virtual cards are linked to a central account, allowing for all transactions to be recorded in one place through real-time tracking. This eliminates manual record-keeping and reconciliation work.

• Automated categorisation: Virtual cards can be set up to automatically categorise various company expenses such as business travel, ad spending, and events. This also helps with more efficient budgeting and identifying areas where spending can be reduced.

• Accounting software integration:  Many virtual card providers offer integration with popular accounting software like Xero, making it even easier for businesses to streamline their financials.

• Budget control: Businesses can set spending limits for each virtual card, ensuring that spending aligns with the company budget. This is particularly useful for companies with multiple departments or teams.

• Save time on expense reimbursement: By assigning virtual cards to employees, companies remove the need for employees to pay out of pocket and submit expense reports later on.

Lower fees

Many virtual cards do not charge annual or transaction fees, making them a more cost-effective option for businesses. Using Airwallex, businesses can create virtual cards and spend in multiple currencies with no domestic or international transaction fees and no hidden charges.

How do virtual cards differ from mobile wallets and payment apps?

Virtual cards, mobile wallets, and payment apps work together to facilitate seamless digital transactions without the need for physical payment instruments. 

Here are the key distinctions between the three:

These distinctions highlight the complementary roles that virtual cards, mobile wallets, and payment apps play in payments. Virtual cards focus on control and security, while mobile wallets and payment apps add convenience.

For example, employees can add virtual cards to Apple Pay or Google Pay for in-person spending, while businesses still keep visibility and control.

Should you use a virtual card for your business?

Whether you're looking to mitigate fraud risks, streamline expenditure tracking, or enhance control over business spending, virtual cards offer a compelling solution for businesses of all sizes. Here are five reasons why you should consider using virtual cards for your business:

• International transactions: If your business often incurs expenses in foreign currencies through international payments or travel, many virtual cards offer the advantage of 0% transaction fees on both domestic and international purchases.

• Scalability and flexibility: As your team expands and the volume of expenses grows, the challenge of managing manual reimbursements becomes more daunting. Virtual cards present a scalable and flexible solution as they can be swiftly issued and managed for new hires, different departments, or specific projects.

• Enhanced security: Disposable virtual cards reduce the risk of fraud and data breaches by giving you the ability to instantly freeze or cancel them when needed. You can immediately create a new card online without being interrupted by a tedious card replacement process.

• Streamlined expense management: Virtual cards offer real-time visibility and control over business expenditures. With the option of customisable spending limits at the transaction level, businesses can ensure responsible spending practices within their organisation.

• Enhanced financial efficiency: If your business incurs regular monthly expenses such as software subscriptions, you can set up recurring payments using your virtual cards to ensure timely payments and avoid any late fees. Moreover, you can dedicate virtual cards to specific vendors, projects, or departmental functions, such as dedicating a card solely for marketing and advertising payments, to facilitate integrated budgeting and spending.

Why use the Airwallex credit card

The Airwallex virtual Visa card helps businesses transact in multiple currencies without incurring any transaction fees. You can create virtual company cards, assigning different spending limits and dedicated use cases for each. This provides greater control over financial outflows by enabling real-time monitoring of employee expenses and fostering transparency in budget management across teams. Moreover, Airwallex prioritises robust safety measures, including the instant ability to create, freeze, or cancel virtual cards, protecting businesses against the threat of card-related fraud.

Apply for an Airwallex Business Account today. Once you’ve completed your application, eligible businesses can submit an Airwallex corporate credit card application by providing the required credit information and supporting documents. Airwallex is currently accepting credit card applications, and final approval is subject to each business’s circumstances and the internal review process.

Frequently asked questions

1. Are virtual cards safe?

Yes, virtual cards are considered highly safe and secure. A unique card number can be generated for each transaction, making virtual cards significantly more secure against fraud and misuse than traditional physical cards. Additionally, most virtual cards come with customisable spending limits, expiration dates, and can be locked or deleted instantly via mobile apps or online platforms. This level of control and security ensures that even if a virtual card’s details are compromised, the risk of financial loss is minimised, offering businesses and individuals a robust layer of protection for their financial transactions.

2. Why do businesses use virtual cards?

Businesses increasingly adopt virtual cards due to their enhanced security features, cost-effectiveness, and convenience. Virtual cards help streamline ‌accounting processes, as they can be directly integrated with expense management systems like Xero, facilitating real-time monitoring and reporting. This integration not only improves operational efficiency but also offers greater visibility into spending patterns. Additionally, the ability to set specific spending limits and expiration dates on virtual cards enables businesses to maintain tighter control over expenses, further enhancing their budgeting.

3. Can I withdraw cash from virtual cards?

Typically, virtual cards are designed primarily for electronic transactions and are not directly usable for withdrawing cash at ATMs or bank branches. However, certain financial institutions or card issuers may offer specific features that allow funds from a virtual card to be transferred to a linked account that a physical card can access, which could then potentially be used to withdraw cash.

Sources:

Information was sourced as of July 2026 for reference purposes. For the latest details, please visit each provider’s official website.

1. https://www.gartner.com/en/newsroom/press-releases/2020-09-15-gartner-says-80--of-b2b-sales-interactions-between-su

2. https://www.grandviewresearch.com/industry-analysis/virtual-cards-market-report

3. https://www.futuremarketinsights.com/reports/virtual-cards-market

Disclaimer: This article was updated in July 2026 based on voluntary online research and publicly available information. We have not personally tested every tool or provider mentioned. This article is for educational purposes only, and readers should independently evaluate each service provider based on their specific business requirements. Content is updated every six months. To request an update, please contact us at [email protected].