Virtual Debit and Credit Cards Comparison
Our guide explains the differences between virtual and digital debit cards, lists the best virtual card options, outlines the pros, cons, and use cases, and covers frequently asked questions.
Updated 18 August 2024
Summary:
Our guide covers:
Know This First: Choosing Between Virtual, Digital, and Physical Cards:
- Virtual debit and credit cards offer enhanced security, convenience, and flexibility, especially for those who frequently shop online, manage subscriptions, or need multi-currency options.
- While linking debit cards to Apple Pay and Google Pay creates a digital card, no New Zealand bank offers virtual or disposable debit or credit cards. However, in August 2024, ANZ introduced a Dynamic Security Code feature where, through the ANZ goMoney app, customers can access a three-digit code that updates every 12 hours, offering added security compared to the standard CVV code on physical cards. We may see other banks innovate in this area.
- Our guide explores offerings from Wise, Revolut, Prezzy Card, and Klarna - all of which provide virtual and/or disposable card features currently unavailable from any New Zealand bank.
Our guide covers:
- What is a Virtual Debit Card?
- Virtual vs Digital Debit Cards - What's the Difference?
- The Best Virtual Debit, Credit and Prepaid Cards
- The Pros and Cons of Virtual Debit, Credit and Prepaid Cards
- Examples of When Using a Virtual (and Disposable) Debit Card Can Be Useful
- Frequently Asked Questions
Know This First: Choosing Between Virtual, Digital, and Physical Cards:
- Virtual and Disposable Cards: Ideal for secure online shopping, managing subscriptions, and international purchases. Providers like Wise or Revolut usually issue these cards. Disposable cards offer added security by expiring after a single use, making them excellent for one-off payments.
- Digital Cards: These are best for everyday in-store transactions via mobile wallets, such as Apple Pay or Google Pay. These are typically linked to your bank-issued credit or debit cards (including AMEX) and offer the convenience of contactless payments with your smartphone.
- Physical Cards: Physical cards are still necessary for cash withdrawals, certain in-person transactions, or as a reliable backup if digital payments are unavailable. They are also useful when a retailer does not accept contactless payments or mobile wallet options.
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What is a Virtual Debit Card?
In a nutshell:
How does a Virtual Debit Card work?
What is a Disposable Virtual Debit Card?
- A virtual debit card is a digital payment option linked to your bank account, accessible through your smartphone.
- Unlike the physical debit card typically issued with most bank accounts, a virtual debit card exists purely in digital form. It has a unique 16-digit card number, expiry date, and CVV code - different from your regular debit card.
- While you can add your physical card to your phone’s digital wallet (like Apple Pay or Google Pay, doing so simply replicates the details of your physical card.
- In contrast, a virtual debit card provides separate payment details, adding an extra layer of security and control for online transactions.
- Virtual cards are usually offered by digital-first providers like Wise and Revolut. or specialist financial platforms, particularly where enhanced payment security is a priority. This makes them especially appealing for secure online shopping or international payments.
- Some virtual cards are also ‘disposable’, meaning they’re issued for one-time use only. After the transaction, the card expires - ideal for one-off purchases where maximum security is needed.
How does a Virtual Debit Card work?
- To get started with a virtual debit card, you’ll need to sign up with a provider that offers this service, such as Wise or Revolut.
- Once you apply through their app, your virtual card details—card number and CVV — are instantly available. You can use these details immediately for online payments or add them to your smartphone’s digital wallet.
- Virtual debit cards function like any other card linked to your bank account. Transactions appear on your statement as usual, and you can use the virtual card for online purchases or in-store payments via mobile wallets like Apple Pay and Google Pay.
- You pay by tapping your phone, similar to contactless transactions with a physical card.
- The encryption of virtual card details ensures added security, scrambling your information during transactions to make it difficult for anyone else to access.
- In some cases, additional verification - like a one-time activation code sent via text or an in-app approval request may be required at the point of purchase.
- Important: Virtual debit cards can’t be used to withdraw cash from ATMs.
What is a Disposable Virtual Debit Card?
- While most virtual debit cards are reusable, some providers offer disposable cards for one-time use.
- These disposable cards have unique payment details that expire after a single transaction. Once used, the card details are no longer valid.
- In comparison, standard virtual debit cards allow you to reuse the same card number and security details for multiple transactions, making them more versatile for regular use.
Virtual vs Digital Debit Cards - What's the Difference?
Given the lack of innovation among New Zealand banks, terms like "virtual debit cards" and "digital debit cards" are often used interchangeably. However, they refer to slightly different concepts - understanding the distinction will help you choose the right option for your needs.
1. Virtual Debit Cards:
Virtual debit cards are fully digital payment cards issued without a physical counterpart. They are typically designed for secure online shopping, digital subscriptions, and other internet-based transactions. Key features include:
Our view: Virtual debit cards suit anyone wanting to shop online but not risk their primary debit or credit card. Because they're digital, virtual cards can't be stolen and re-used. Cardholders can also freeze and unfreeze cards as they need and replace the card altogether if the card is compromised. However, arguably, the best benefit is using a virtual card to set up subscriptions to ensure no additional transactions are debited without your knowledge.
- Instant issuance: Once you request a virtual debit card, it's almost always issued instantly. You can start using it immediately without waiting for a physical card to arrive.
- No physical card: Unlike traditional debit cards, virtual cards do not exist in physical form. They are purely digital, consisting of card details (number, expiry date, and CVV) you can access through the card's app.
- Security enhancements: Virtual debit cards are often designed with enhanced security features, such as single-use or temporary card numbers. These features make them ideal for reducing the risk of fraud when making online purchases.
Our view: Virtual debit cards suit anyone wanting to shop online but not risk their primary debit or credit card. Because they're digital, virtual cards can't be stolen and re-used. Cardholders can also freeze and unfreeze cards as they need and replace the card altogether if the card is compromised. However, arguably, the best benefit is using a virtual card to set up subscriptions to ensure no additional transactions are debited without your knowledge.
2. Digital Debit Cards:
Digital debit cards typically refer to physical debit cards available in a digital format for use through mobile wallets like Apple Pay or Google Pay. They offer the convenience of mobile payments alongside the traditional functionality of a physical card. Key features include:
Our view: Digital debit cards are ideal if you want the flexibility of using digital payments and a physical card for everyday transactions.
- Linked to physical cards: Digital debit cards are usually just the digital version of your physical card. The card details, such as number and expiry date, are identical.
- Mobile wallet integration: You can add your digital debit card to mobile wallets like Apple Pay and Google Pay, allowing seamless in-store payments with just your phone or watch.
- Versatile Usage: Digital debit cards can be used for online and in-store purchases, offering more flexibility than virtual cards.
Our view: Digital debit cards are ideal if you want the flexibility of using digital payments and a physical card for everyday transactions.
Virtual vs Digital Debit Cards - Key Differences in Usage, Setup, and Purpose
| Feature | Virtual Debit Card | Digital Debit Card |
|---|---|---|
| Physical Card | No physical card available | Tied to a physical card |
| Primary Use | Online shopping, digital subscriptions | Both online and in-store payments |
| Setup Time | Instant issuance; no waiting | Requires initial setup and often a physical card delivery |
| Security | Enhanced, with temporary or disposable card numbers | Secure, but same as the physical card’s details |
| Convenience | Best for online-only transactions | Offers more versatility (online + in-store) |
| Supported Platforms | Typically managed through bank apps or fintechs | Integrated with mobile wallets (Apple Pay, Google Pay) |
Which option is better for different use cases?
Choosing between a virtual debit card and a digital debit card depends on your specific needs:
- For secure online shopping: Virtual debit cards are often the best choice, especially for one-off purchases, trial subscriptions, or when you want an extra layer of security through temporary card numbers.
- For all-purpose use: A digital debit card is the better option if you need a card for both online and in-store transactions and want the convenience of contactless payments through your smartphone.
- For quick setup and flexibility: If you need a payment option immediately or want to avoid carrying a physical card, virtual cards offer instant, hassle-free access.
The Best Virtual Debit, Credit and Prepaid Cards
To access a virtual debit card, you'll need an account with a provider that offers this service. Below, we outline what's available, along with specific features and fees, so that you can find the right option for your needs.
To help you, our top picks are based on specific purposes:
To help you, our top picks are based on specific purposes:
- Best for International Use: Wise
- Best for Multi-Currency Management: Wise
- Best for Secure Gift Giving: Prezzy Virtual Card
Wise (Standard Account)
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Revolut (Standard Account)
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Prezzy Virtual Card (Preaid option)
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Klarna One-time Card (Credit option)
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Warning: Each time you use Klarna's One-time card service you will receive a unique card number to use in a store's checkout, like any regular credit card. Each One-time card transaction then creates a new debt which has a specific payment plan you'll need to manage and pay in the app; late fees apply.
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The Pros and Cons of Virtual Debit, Credit and Prepaid Cards
Pros:
Cons:
- Enhanced security: Virtual cards add an extra layer of protection, reducing the risk of losing money to fraud. If your virtual card details are compromised, you don't need to freeze your main bank account or wait for a new physical card. You can generate a new virtual card and securely continue your payments.
- Control over subscriptions: Virtual cards are handy for managing subscriptions, especially short-term free trials you might cancel. Using a disposable virtual card means the retailer can't continue to charge you once the card expires.
- Competitive currency exchange Rates: For anyone making international purchases or managing foreign currencies, apps like Wise and Revolut offer virtual cards with low foreign exchange fees, which make them popular for overseas shopping or travel.
Cons:
- Limited local options: While global providers like Revolut and Wise are available in New Zealand, the local market still lacks widespread options from traditional banks for virtual cards. You'll need to run a separate card, and your transactions won't appear on your bank statement.
- No cash withdrawals: Virtual debit cards cannot be used to withdraw cash from ATMs, limiting their flexibility compared to physical cards.
- Potential Fees: Some virtual card providers may charge fees (for example, the Prezzy Virtual Card and late payments for the Klarna card).
Examples of When Using a Virtual (and Disposable) Debit Card Can Be Useful
- Secure online shopping: Anna, a tech enthusiast from Wellington, frequently buys electronics from global online stores. She uses her Wise virtual card to shop on international websites, taking advantage of low currency conversion fees and protecting her main debit card from potential online fraud.
- Managing subscriptions efficiently: Mike, a freelancer in Auckland, uses multiple digital tools and services that require monthly subscriptions. He sets up each subscription using Revolut’s disposable virtual cards to keep things organised and secure. If he cancels a service, he simply discards the card, preventing unexpected charges.
- Budgeting for the supermarket shop: Sarah, a young professional in Christchurch, is trying to stick to a weekly supermarket budget. She sets a fixed amount on her Wise virtual card each week and uses it solely for groceries. This method helps her avoid overspending.
- Control over Facebook Advertising expenses: Chris, an entrepreneur running an online store from Tauranga, uses Wise virtual cards to manage his Facebook ads. Since ad accounts can sometimes get blocked, he generates a new virtual card using Revolut each time he sets up a new campaign. This strategy gives him better control over his spending while minimising risks.
- Travel booking for business: Jenny from Auckland uses a Wise virtual card for booking flights and hotels for her small business, keeping business expenses separate from personal spending with multiple virtual cards.
What about Klarna and Prezzy Card?
- We deliberately avoid highlighting Klarna as a preferred option for any specific need because we believe the virtual card encourages debt creation. While a one-time virtual card is appealing for secure transactions, it’s important to recognise that each purchase involves creating a new line of credit with repayment terms that can easily lead to unnecessary financial strain.
- While the Prezzy Virtual Card offers convenience as a digital gift option, it’s not well-suited for broader use due to its high foreign exchange fees (3.5% on non-NZD transactions), high upfront costs and lack of flexibility for regular spending, given it needs continuous top-ups and can't receive bank transfers like Wise or Revolut. As a result, we don’t see it as a strong contender for everyday online shopping or international purchases.
Virtual Debit, Credit and Prepaid Cards - Frequently Asked Questions
Do any New Zealand banks offer virtual credit or debit cards?
No New Zealand banks currently provide virtual credit cards. While you can add your physical credit card to a digital wallet (like Apple Pay or Google Pay), this doesn't generate a unique virtual card with separate details.
If you're looking for added security or multiple card numbers, platforms like Wise and Revolut offer virtual card options, though these are generally prepaid rather than credit-based. We believe New Zealand banks have been slow to adopt virtual card technology and won't be introducing any such functionality anytime soon.
If you're looking for added security or multiple card numbers, platforms like Wise and Revolut offer virtual card options, though these are generally prepaid rather than credit-based. We believe New Zealand banks have been slow to adopt virtual card technology and won't be introducing any such functionality anytime soon.
Where can I use a virtual debit card?
You can use your virtual debit card for online purchases and any retailer accepting contactless payments. Virtual cards are compatible with digital wallets like Apple Pay and Google Pay, allowing you to pay with your phone wherever tap-and-go is supported. However, virtual cards cannot be used for cash withdrawals at ATMs, as they don’t have the physical element needed to interact with machines.
How do I get a virtual debit card?
To get a virtual debit card, you must first open an account with a provider offering this service, as outlined above. Once your account is set up, you can request a virtual card instantly through the provider’s app or website. Since the process is fully digital, you’ll have immediate access to your card details, which are ready for use as soon as they are generated.
Are virtual debit cards widely accepted in New Zealand?
Yes, virtual debit cards can be used anywhere that accepts contactless payments or online purchases.
Can I use virtual cards for recurring payments like power, broadband or insurance charges?
Yes, if the provider accepts cards, you can use virtual debit cards for recurring payments such as subscriptions, power and broadband, insurance, or other costs,
What happens if my virtual card is compromised or details are stolen?
One of the main benefits of virtual cards is that you can instantly disable or delete them through your app if your details are compromised. You can generate a new card with different details immediately without affecting your main account, reducing the risk of fraud.
Is a virtual debit card the same as a prepaid card?
No, while both virtual and prepaid cards can be used similarly, a virtual debit card is directly linked to your transactional account, whereas a prepaid card requires you to load funds in advance. Virtual cards offer more flexibility, while prepaid cards are often used for budgeting or gifts.
Can I set spending limits on virtual debit cards?
Yes, most providers like Wise and Revolut allow you to set spending limits, either daily or monthly. This is particularly useful for budgeting or controlling expenses like supermarket trips or subscriptions.