Virtual Prepaid Cards: What Are They & How Do They Work?
A virtual prepaid card has the same functions of a physical prepaid card except that you can only use them for online purchases and for phone orders. Since they are designed for online purchases and phone orders, you can’t use them at retail stations for POS purchases. However, these cards facilitate the customer’s online shopping experience by making it safer and more convenient for them to make purchases.
Like physical prepaid cards, virtual prepaid cards have a 16-digit card number with a CVV number attached. They are also valid to use at any online merchant where Visa® and MasterCard® is accepted, which provides customers with buying options and flexibility.
How are they Delivered?
Prepaid card numbers can be printed on co-branded coupons, vouchers and MasterCard or Visa card images. Cards can only be loaded by the issuer and cardholders can receive it through an email that links to a quick-launch screen. Since virtual prepaid cards are digital, there is no production costs as there would be for plastic cards. In fact, cards can be delivered within 3-4 weeks as opposed to waiting 6-8 weeks for card production.
What are the Main Differences in Comparison to a Plastic Card?
- NO ATM (Cash Access)
- Quick Launch window
- Online Purchases ONLY
- Reloadable by Corporate only
- Treated as card not-present transaction by merchant
- Balance limited to $2500.00 (depends on the card provider)
What are the Best ways Companies can Use a Prepaid Card?
Corporate Incentive Programs: Use virtual cards to offer incentive programs for employees such as bonuses, travel programs, and cash cards. These are cost-effective for companies and very convenient for employees to use.
Marketing and Sweepstakes Campaigns: Virtual prepaid cards are great for marketing campaigns. They make it easy for companies to offer value added promotions to customers with little effort and costs. E-commerce is also on the growth so any type of digital offer for online redemption appeals to customers.
A great example of a company who used virtual prepaid cards for a marketing campaign is Sprite. They launched the “Bringing Home the Green to Win” sweepstakes promotion. The contest consisted of a game where customers would have the chance to win bigger monetary cash prizes. The winners received a virtual prepaid card for online back-to-school purchases. Here is what it looked like:
Event Ticket Distribution: Event tickets can be distributed on a virtual prepaid card, where the recipient can go online to buy their tickets. These virtual cards include a 16-digit number, a CVV number, and an expiring date. A common example of an event ticket distribution is e-movie cash cards as the one shown below:
Part-time or Remote Payroll: Virtual prepaid card makes it easier for employers to pay short term/low payments to employees that are remote, part time or in project-specific roles. Since the employee wouldn’t be in the regular payroll cycle, a virtual prepaid card makes it convenient and cost-effective for the employer to pay them.
Benefits of a Virtual Prepaid Card
- Co-branded card vouchers
- No ATM transactions or fees
- Standard submission process
- Online Use and Phone POS only
- Quick launch window (3-4 weeks)
- Program approvals within 5-10 business days
- No card costs and production delays since cards are digital
- Reduced Fraud because prepaid card is not connected to your bank account