Virtual cards were first introduced in the late 1990s, as a response to the increasing popularity of online shopping and the need for a secure and convenient method of payment by customers.
One of the earliest virtual card providers was a company called Beenz.com, which launched in 1998 and offered a virtual currency that could be used to purchase goods and services online. In 2000, a company called Trintech introduced a virtual credit card product called PayWare eIssuer, which allowed businesses to issue virtual credit cards to their employees for online purchasing. This card details have a specific number and limited to a certain amount, once exceeded the card automatically expires.
Today, virtual cards are widely used for a variety of purposes, including online shopping, subscription services, and mobile payments. They offer a number of advantages over physical cards, including greater security, flexibility, and convenience. As technology continues to evolve, it is likely that we will see even more innovative uses for virtual cards in the future. Various companies have taken advantage of this technology to provide services for their customers and Nigeria is no exception.
In Nigeria, we have some Financial Technology companies (Fintech) who provide the service of virtual cards in the Naira and various foreign currencies such as the dollars and pounds. We will be discussing some of these cards that are available in nigeria.
First on the list is Flutterwave. Flutterwave offers a virtual card product called Barter. Barter is a digital wallet and virtual card platform that allows users to create virtual cards instantly and use them for online purchases or to make payments in physical stores that accept Mastercard payments. Barter also offers other features, such as the ability to track expenses and set spending limits.
To use Barter, users first need to sign up for a Barter account on the Flutterwave website or mobile app. Once they have created an account, they can add funds to their Barter wallet using a debit card or bank transfer. They can then create virtual cards in multiple currencies, including Nigerian Naira, US Dollars, and Euros.
Users can also link their Barter account to their bank accounts or debit cards, which allows them to transfer funds between their Barter wallet and bank account or debit card. Additionally, Barter offers a feature called Barter Goals, which allows users to set savings goals and save towards them using their Barter wallet.
Overall, Barter is a convenient and secure way to make online payments and transactions in Nigeria and other countries where Mastercard payments are accepted.
Paystack offers a virtual card product called Paystack Starter Business. Paystack Starter Business is designed for businesses in Nigeria and allows them to issue virtual cards to their employees for online purchases and other transactions.
To use Paystack Starter Business, businesses first need to sign up for a Paystack account and provide information about their business. Once their account is approved, they can create virtual cards for their employees through the Paystack dashboard. The virtual cards are linked to the business’s Paystack account and can be used to make online purchases or payments.
Paystack Starter Business also offers other features, such as the ability to set spending limits for individual cards, track expenses, and view transaction history. The virtual cards can be used for transactions in Nigerian Naira and other currencies, and they are accepted at online merchants that accept Mastercard payments.
Overall, Paystack Starter Business is a convenient and secure way for businesses in Nigeria to issue virtual cards to their employees and manage their online payments and expenses.
KudiMoney is a Nigerian fintech company that offers a virtual card product called Kudi Virtual Card. Kudi Virtual Card allows users to create virtual cards instantly and use them for online purchases or to make payments in physical stores that accept Mastercard payments.
To use Kudi Virtual Card, users first need to sign up for a KudiMoney account through the KudiMoney website or mobile app. Once they have created an account, they can add funds to their KudiMoney wallet using a debit card or bank transfer. They can then create virtual cards in multiple currencies, including Nigerian Naira, US Dollars, and Euros.
KudiMoney also offers other financial services, such as loans, savings, and bill payments. Users can link their KudiMoney account to their bank account or debit card, which allows them to transfer funds between their KudiMoney wallet and bank account or debit card.
Verve eCash is a virtual card that works just like your regular debit/ATM card on Quickteller and other digital platforms. They offer loan services and more often you repay your loan on time, the more your credit rating increases. Your credit rating determines the amount you can borrow in future.
Now that we have discussed the virtual cards available in Nigeria, lets look at some Pros and Cons of using a virtual card in nigeria.
Enhanced Security: Virtual cards offer enhanced security features such as the ability to set spending limits, restrict usage to specific merchants, and create temporary or one-time-use cards. This makes them less vulnerable to fraud and unauthorized use.
- Convenience: Virtual cards can be created instantly and used immediately for online purchases and other transactions. This makes them more convenient than traditional cards, which often require a lengthy application process and can take several days or weeks to arrive in the mail.
- Cost-effectiveness: Virtual cards can be more cost-effective than traditional cards, as they often have lower fees and do not require physical production and distribution costs.
- Control: Virtual cards give users more control over their spending and finances, as they can set limits and restrictions on usage. This can help users stick to their budget and avoid overspending.
- Accessibility: Virtual cards can be used anywhere that accepts Mastercard or Visa payments, making them a useful payment option for online transactions and international purchases.
Virtual credit cards have certain drawbacks, such as the seller bearing the risk because products are delivered to the customer prior to funds being transferred to the business account. Additionally, there can be a delay between the sale and payment on the merchant’s account.
For consumers, when purchasing items like office supplies or plane tickets, they may need to physically present their credit card to pick up the item, meaning the virtual card number used online won’t match the credit card number they possess. Furthermore, recurring fees may pose issues because the card number may have already expired during their next purchase.
In conclusion, virtual cards are gaining popularity in Nigeria as they offer a secure and convenient option for making online payments and transactions. Fintech companies such as Paystack, Flutterwave, and KudiMoney have introduced virtual card products that cater to the needs of both individuals and businesses. Despite some disadvantages such as the seller’s risk and occasional need for physical credit card verification, virtual cards offer several advantages including instant card creation, multi-currency options, and improved security. As the fintech industry in Nigeria continues to evolve, virtual cards are likely to become an increasingly popular alternative to traditional payment methods.