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| Report Code: A17176 | Jul 2022 | Pages: 384 | ||
| Tables: 184 | Charts: 68 |
| |
The global virtual cards market size was valued at $281.22 billion in 2021, and is projected to reach $1,893.08 billion by 2031, growing at a CAGR of 21.3% from 2022 to 2031.
During the COVID-19 pandemic, as the usage of cash reduced, adoption of virtual cards helped various small and medium enterprises to increase their productivity by implementing virtual cards as a mode of payment. This helped consumers to make payments for purchases using their virtual cards. Therefore, virtual cards had a positive impact on the economy during the COVID-19 pandemic.
A virtual card allows secure online transactions as it reduces the risk of exposing the underlying credit/debit card details to the vendor. Since they are only visible to the user, any chance of cloning or fraud is negligible. Moreover, every virtual card is meant for one time use. It is created for a single online transaction and is valid for a maximum of 48 hours. The credit limit and validity period may vary from bank to bank.
Virtual cards costs lower than physical cards since, a lot of virtual banks tend to have much fewer fees required for customers. Moreover, everything is run online, so the operating costs can be cut down by the virtual bank and in turn, they charge less on the virtual cards to their customers. In addition, virtual cards offer added security benefits to their customers as compared to physical cards. Moreover, customers can set their own spending limits in a virtual card, which allows them to save more. Therefore, these are some of the factors propelling the virtual cards market growth. However, there are chances of fraud if the smartphone is stolen, through which the user’s virtual card is used which has access to the virtual card. Moreover, the demand for physical cards is still more than virtual cards. Therefore, these are some of the major factors limiting the growth of the virtual cards market. On the contrary, consumer trends towards touch less payments over physical payments and rapid innovation in the payments technology are expected to provide lucrative virtual cards market growth in the coming years.
The virtual cards market is segmented on the basis of product type, industry verticals, end user, and region. By product type, it is segmented into B2B virtual card, B2C remote payment virtual cards, and B2C POS virtual cards. The B2B virtual card segment is further sub-segmented into debit card and credit card. By industry verticals, it is bifurcated into media and entertainment, hospitality, consumer goods, energy and utilities, advertising, education, and others. By end user, it is segregated into businesses and individuals. Region-wise, it is analyzed across Asia-Pacific, Europe, North America, and LAMEA.
By product type, the B2B virtual card segment registered the highest growth in 2021. This is attributed to the fact that the shift to virtual cards has happened largely due to increase in demand for this payment method among B2B buyers. Virtual cards can be set up in a way that prevents it from being used for any unintended purposes by someone inside or outside an organization.
Region-wise, North America registered the highest growth in 2021. This is attributed to the fact that consumers in North America are choosing to shop with businesses that offer virtual cards options at the point of sale. Furthermore, millennials’ preferences towards usage of cash is decreasing and over half of the population are likely to avoid shopping at stores that do not offer to pay through virtual cards industry.
The report analyzes the profiles of key players operating in the virtual cards market such as American Express, BTRS Holdings Inc. dba Billtrust, Bento Technologies Inc., Citigroup Inc., Capital One, DBS Bank Ltd., ePayService, HSBC Group, JPMorgan Chase & Co., Mastercard, Marqeta, Inc., Revolut Ltd., Stripe, Inc., State Bank of India, Standard Chartered Bank, Wise Payments Limited, and WEX Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the virtual cards industry. Â
The report focuses on growth prospects, restraints, and trends of the virtual cards market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the virtual cards market.
COVID-19 impact analysis
The COVID-19 pandemic had a positive impact on the virtual cards market. This is attributed to the fact that during the pandemic, consumer were hesitant to use their physical cards for making any payments due to the fear of spread of virus. Moreover, major banks offered their services online and the concept of virtual cards market trends during that period, since customers found it interesting to use affirm virtual cards for making any transactions without touching any surface, such as card swipe machines, which are regularly touched by various people, and could be potentially contaminated with virus. Therefore, the demand for virtual cards increased during the COVID-19 pandemic. Thus, it had a positive impact on the virtual cards market outlook.Â
Top impacting factors
Virtual cards offers added security benefits then physical cards
The reason virtual cards are considered much more secure and safe than physical cards is that the users have the option to terminate the account anytime they want with just a click of a button in case of any data leakage. Moreover, during each transaction, there is a one-time use bank number for users to perform the payment instead of using the same given set of bank numbers to third parties all the time. Contrary to checks or ACH payments, this can drastically improve the data security of the user’s bank account details and protect their privacy even during transactions. With virtual cards, it is impossible for account theft on e-commerce fraud because criminals cannot access to the bank simply by obtaining the physical card. So, users have absolutely no worries about losing their card and getting their important bank details stolen by criminals. Therefore, this is one of the major driving factor of the virtual cards market.  Â
Consumer attraction towards physical cards
For many people, physical cards are the primary way to pay. A large section of customers are not satisfied with virtual cards and still want a physical card for making transaction. In addition, physical cards are considered more convenient by users who are not technologically advanced. Moreover, physical cards are almost universally accepted when the user is paying in person, whereas they cannot offer a virtual card number to pay for a number of services. Therefore, this is a major factor hampering the growth of virtual cards market.
Rapid innovation in payments technology
The COVID-19 pandemic has tremendously affected the social and economic well-being. However, it is one of the biggest drivers of digitalization across the globe. Digital payments, including virtual credit cards have emerged as a fool-proof way for businesses and enterprises to operate in the new normal post COVID-19. In the coming years, the advancement in technology might see acceleration in the adoption of virtual gift cards. This might also result in rapid innovations in the contactless technology that is expected to encourage FinTech startups and enterprises to heavily disrupt the financial sector. In addition, the rapid adoption of contactless payment methods to reduce the usage of cash is expected to provide major lucrative opportunities for the growth of the virtual cards market in the upcoming years.
Key benefits for stakeholders
Virtual Cards Market Report Highlights
| Aspects | Details |
|---|---|
| By End User |
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| By Product Type |
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| By Industry Vertical |
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| By Region |
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| Key Market Players | Mastercard, Billtrust (BTRS Holdings Inc.), Standard Chartered Bank, JPMorgan Chase & Co., ePayService, Capital One, WEX Inc., American Express, Bento Technologies Inc., Marqeta, Inc., State Bank of India, HSBC, Stripe, Inc., DBS Bank Ltd, Citigroup Inc., Wise Payments Limited, Revolut Ltd |
Virtual cards use a uniquely generated card number, expiration date, and security code as a proxy to a traditional plastic card or paper check. This process gives the business and its respective account holders a level of added security while easing some of the hassles of traditionally cash or check-based payments processes. Furthermore, Over the recent years businesses have reduced their check usage in favor of electronic payments, paving the way for virtual cards to be used across numerous use cases from supplier invoice payments to instantly generating a one-time use card for employees to manage day-to-day spend. With recent technology advances, it is easier and more secure for an employee to use their mobile phone to make online and contactless purchases using virtual card solutions.
Google announced that its Chrome browser will now offer users the ability to use a virtual credit card number in online payment forms on the web. These virtual card numbers allow users to keep their real credit card number safe when they buy something online since they can be easily revoked if a merchant’s systems get hacked. In addition, major companies in the payment sector are partnering to take advantage of the growing demand for virtual cards. For instance, American Express and Extend, a New York City-based FinTech specializing in virtual cards, announced their partnership to expand virtual card solutions for U.S. businesses. U.S. companies with an eligible American Express business card now enroll and create virtual cards, also known as tokens, through Extend’s app or desktop login in as little as five minutes using their existing American Express Card account. Moreover, according to the Global Business Spend Indicator by American Express, 39% of U.S. businesses surveyed are expected to expand their use of virtual cards over the next 12 months. The ability to create American Express virtual cards through Extend offers significant benefits for businesses. Some of the key players profiled in the report include American Express, BTRS Holdings Inc. dba Billtrust, Bento Technologies Inc., Citigroup Inc., Capital One, DBS Bank Ltd., ePayService, HSBC Group, JPMorgan Chase & Co., Mastercard, Marqeta, Inc., Revolut Ltd, Stripe, Inc., State Bank of India, Standard Chartered Bank, Wise Payments Limited, WEX Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
A. Rapid innovation in the payments technology and growing concerns over no touch payments are some of the major trends in the market.
A. By product type, the B2B virtual card segment registered the highest growth in 2021. This is attributed to the fact that the shift to virtual cards has happened largely due to increase in demand for this payment method among B2B buyers. Virtual cards can be set up in a way that prevents it from being used for any unintended purposes by someone inside or outside an organization.
A. Region-wise, North America registered the highest growth in 2021. This is attributed to the fact that consumers in North America are choosing to shop with businesses that offer virtual cards options at the point of sale. Furthermore, millennials’ preferences towards usage of cash is decreasing and over half of the population are likely to avoid shopping at stores that do not offer to pay through virtual cards industry.
A. The global virtual cards market size was valued at $281.22 billion in 2021, and is projected to reach $1,893.08 million by 2031, growing at a CAGR of 21.3% from 2022 to 2031.
A. American Express, BTRS Holdings Inc., JPMorgan Chase & Co., Mastercard, Revolut Ltd., Stripe, Inc., Standard Chartered Bank, Wise Payments Limited, and WEX Inc. are the top companies to hold the market share in Virtual Cards.
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