Virtual cards vs physical cards: Which is right for your business?

What are virtual and physical cards?

Before weighing the merits of each, it's worth establishing what we're actually discussing in the context of card issuance.

A physical card is a tangible payment instrument - plastic or occasionally metal - that carries payment credentials through a magnetic stripe, chip, and typically contactless functionality. These cards work wherever card payments are accepted, whether in store or for online purchases. For businesses offering card programs, physical cards represent a traditional but proven product that users understand instinctively.

Related reading: Virtual cards 101: A complete guide for businesses

The pros and cons of virtual & physical cards

Understanding the strengths and limitations of each card type is essential for making informed product decisions. Here's how they compare across key dimensions:

Security, cost and operational considerations

When evaluating virtual versus physical cards as part of your product offering, several factors should inform your approach.

Security

Both card types support modern security features including tokenisation, encryption, and real-time transaction monitoring. However, the control mechanisms you can offer customers differ substantially.

Virtual cards enable precise, transaction-level restrictions that sophisticated customers value highly. You can provision cards that work only for specific suppliers, expire after single use, or are limited to particular spending categories. This granular control reduces fraud exposure and makes anomaly detection more straightforward.

For fintechs, embedded finance providers and SaaS enterprises, serving customers with complex spending policies, these capabilities become product differentiators. The ability to offer, and/or utilise, single-use virtual cards for accounts payable automation, project-specific cards with defined budgets, or merchant-locked cards for subscription management addresses real pain points that physical cards handle less elegantly.

Physical cards, whilst secure, operate with broader parameters. Once issued, they remain active until cancelled, and whilst you can enforce overall spending limits or block merchant categories, transaction-level restrictions are more limited.

Use cases: When each card type works best

Understanding when to offer each card type requires examining specific scenarios where one clearly outperforms the other.

Where virtual cards excel

Corporate spend management platforms

Corporate spend management represents ideal virtual card territory. Businesses using card programs to manage employee expenses, departmental budgets, or project spending benefit enormously from:

• Instant issuance for employees or projects
• Granular controls tied to cost centres
• Automated reconciliation with accounting systems
• Single-use cards for one-off purchases

Finance teams can issue unique virtual cards for each cost centre, making budget tracking straightforward and spend policy enforcement automatic.

Accounts payable automation

Rather than processing supplier invoices through traditional payment rails, businesses can use virtual cards to pay vendors quickly whilst maintaining control and generating detailed transaction data. For fintechs offering AP automation as part of their value proposition, virtual cards become an essential product component.

Embedded finance scenarios

Vertical SaaS providers, or ecosystem orchestrators lean heavily on virtual cards. With the need to facilitate payments between platform users or enable spending within closed-loop environments, virtual cards provide:

• Programmatic issuance via API
• Customisable parameters per transaction
• Instant provisioning without physical logistics

Subscription and recurring payment management

Businesses can assign unique virtual cards to each subscription or service, making vendor payment management cleaner and preventing surprise charges. Benefits include:

• One card per vendor for clear tracking
• Automatic spend categorisation
• Easy cancellation without affecting other services
• Protection against unauthorised price increases

Where physical cards are essential

Business travel programs

Business travel programs still revolve around physical cards for practical reasons. Hotels, airlines, car hire companies, and the full ecosystem of travel-related merchants expect physical cards, often placing authorisation holds or requiring card-present verification that virtual alternatives can't satisfy.

Retail and hospitality card programs

Whether it's gift cards, loyalty cards with payment functionality, the physical format often aligns with customer expectations and point-of-sale requirements. For retailers launching card programs, the physical card itself becomes part of the brand experience.

Traditional industries and lower digital adoption segments

Companies in traditional industries - such as national retailers - and customer segments with lower digital adoption may similarly prefer or require physical cards simply because that's what users understand and trust. If you're serving these markets, meeting them where they are often means offering physical cards as the primary or only option. However, even national retailers like Sainsburys are embracing digital transformation strategies and leveraging virtual cards - so it’s vitally important to understand you customer preferences.

The hybrid approach

Increasingly, businesses are recognising that they don't need to choose one card type exclusively. The most effective programs offer both, allowing users to select the option that fits their specific use cases.

How Edenred Payment Solutions supports both

Building a comprehensive card program requires infrastructure that supports your product vision regardless of whether that means virtual cards, physical cards, or both.

Edenred Payment Solutions provides card issuing and processing services designed for businesses that want to offer cards to their own users, , providing the technical infrastructure to support programs at scale.

Unified platform for both card types

The platform handles both virtual and physical card issuance through a single integrated system. This means you can offer customers instant virtual cards for digital transactions and automated workflows alongside physical cards for travel, field operations, or traditional use cases - all managed through unified program controls and reporting.

Comprehensive virtual card capabilities

For virtual cards, the infrastructure supports:

• Instant provisioning and delivery
• Configurable parameters (spending limits, merchant restrictions, expiry dates)
• API-based integration
• Transaction-level controls for sophisticated spending policies
• Single-use and multi-use card generation
• Bulk issuance for large-scale programs

Robust physical card infrastructure

For physical cards, capabilities include:

• Secure distribution networks
• Customisation options for branding and design
• Fulfilment infrastructure for reliable delivery

The processing infrastructure is built to handle high transaction volumes and complex program requirements, making it suitable for businesses with demanding operational needs or rapid growth trajectories. Integration capabilities mean you can connect card functionality into your existing platforms and user experiences rather than requiring your customers to adopt separate systems.

By partnering with a provider that treats virtual and physical cards as complementary capabilities rather than competing products, you gain the flexibility to evolve your card offering as your business grows and customer needs change, without being constrained by infrastructure limitations.

Final thoughts

For businesses building or expanding card programs, the question isn't which card type is objectively better. It's which options will best serve their specific users whilst supporting the business model, brand positioning, and growth trajectory.

Ready to build a flexible card program?

Discover how we can support both virtual and physical card issuance with enterprise-grade infrastructure and scalable processing capabilities.