Banks Bet on Virtual Cards as the New Credit Battleground

When Apple Pay launched in 2014, it promised a future free of plastic. Over a decade later, the ripples of that revolution are still unfolding across the way consumers pay, but not in the way observers may have expected a decade ago.

While digital wallets have become a staple of online and in-store payments, it’s virtual cards, once a fringe tool for tech-savvy shoppers, that are quietly emerging as the next frontier in consumer finance.

The PYMNTS Intelligence report “Digital Payments Evolution: Virtual Cards Poised to Take Off,” a collaboration with Elan, revealed that 42% of consumers in the United States used a virtual card in the last six months, primarily for online purchases and subscriptions. Plus, 65% said they’re likely to use one in the year ahead.

This could signal a potential turning point not just in adoption, but in the public’s appetite for payment tools that offer control, security and flexibility beyond what digitized physical cards can provide.

Digital wallets have already done much of the heavy lifting in familiarizing consumers with cardless payments. Today, over half of U.S. consumers store at least one card in a wallet like Apple Pay or Google Wallet. That familiarity is increasingly proving crucial to the rise of virtual cards, which don’t exist as plastic first. Instead, they’re issued and used entirely digitally, often with one-time numbers for each transaction, limiting exposure to fraud.

The Post-Wallet Phase of Digital Payments

Among the most tech-savvy consumers, meaning those who own devices ranging from smartwatches to electric vehicles, nearly 3 in 4 have used virtual cards for online shopping. More than half have used single-use numbers. For this cohort, control and real-time functionality matter more than physical tangibility.

For banks, card issuers and FinTechs, the next wave of digital payment innovation may not be about porting physical cards into phones, but instead around offering dynamic digital products that better reflect how consumers want to pay and protect themselves online.

Virtual cards also unlock more sophisticated features. Real-time spending controls, immediate issuance post-approval, and seamless integration with merchant apps position them as more than a defensive tool. They’re a vehicle for engagement and differentiation in a competitive credit market.

This opportunity is bifurcated, however. Digital Finance Enthusiasts — those who use mobile banking and budgeting apps daily — are the primary adopters. Meanwhile, the Mainstream Tech segment, including many Generation X and older consumers, still view rewards and cash back as top drivers, echoing the value propositions of traditional credit cards.

The challenge now lies in bridging these two audiences. For digital-first consumers, highlighting virtual cards’ security, tech integration and convenience is key. For others, linking these features to familiar benefits like cash back or fraud protection could be essential to driving adoption.

The report found that 17% of Basic Tech users said better fraud detection would increase their usage, but a full quarter of them also admitted they had never heard of virtual cards. Financial institutions must go beyond offering the product — they must explain why it matters, how it works, and where it fits in the broader payment ecosystem.

Digital wallets may have cracked the door open. Virtual cards are poised to walk through it and redefine the very concept of a cardholder along the way. At the end of the day, the spotlight could now belong to the cards users can’t touch.