Future Of Credit Cards: Will Virtual Cards Takeover?

Eventually, there will be a shift to digital credit cards but for now, physical and virtual cards will coexist

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In the last decade, people have moved more towards digital shops than the traditional ones, which has increased the use of card payments as well. This shift gave the fintech sector deep scope of advancement similarly and thus the launch of virtual credit cards took place. Nevertheless, this shift and the innovation has been debatable whether or not virtual cards will take over credit cards.


Credit cards have been an essential part of our lives for a long time now. Although, physical credit cards are hardly in use anymore due to the innovation of digital/virtual credit cards, which is booming in the pandemic. Online transactions have increased since the coronavirus came into the picture. People now prefer staying home and use contactless payment modes like QR scanners or just a tap on the phone to pay.

Initially, in the 1950s, the “Diners Club Card”--made out of cardboard--came into existence, whereas the first plastic credit card was actually introduced by American Express in 1959. In the 1960s, Visa (formerly known as the Bank of America) allowed their clients to make payments on their purchases in instalments or by paying later, by giving them an opportunity to use the general-purpose credit card.

The Change That Triggered From Physical Cards To Digital Cards

After overruling for 70 years, the physical credit cards are now converted to digital credit cards. Over the years, especially in the 2000s, the usage of credit cards has increased due to the convenience, offers and safety provided by banks.

During the pandemic, people wanted to avoid contact with each other, triggering the popularity of contactless cards, which required a proper Internet connection. However, the usage of these cards was short-lived due to transmission issues.

Furthermore, the growing e-commerce market also gave a push to the number of card payments/transactions. People preferred keeping their credit card details on the phone itself. The increasing online transactions and technological advancements innovated the new digital credit cards which serve the same purpose as the traditional credit cards.

Benefits Of Credit Cards

Credit cards whether physical or virtual provide many offers, discounts and a lot of conveniences. The most popular credit card benefit is the option to Buy Now and Pay Later where you can make big purchases on borrowed credit, which you could return in small EMIs amounts over some time. For large amounts, it is easier to pay through credit cards rather than carrying a hefty sum of cash around with you.

Credit cards are one of the most commonly accepted modes of payment, worldwide, as it allows cardholders the opportunity to enjoy the benefits of using a credit card from anywhere.  A credit card not just helps in big purchases but one can also earn credit points which help in earning travel points, purchases of other items through the credit points.

A credit card also helps at the time of emergency payments and a good credit score can help you while applying for loans from any bank.

Tech Disruption In Credit Cards

With the shift to digital cards, there is an existential threat to traditional credit cards. The physical credit cards offered customer support with long waitings with jingles and IVR-based menus. Often, blocking the credit card (when stolen) and getting answers to important transactions became miserable. However, now with digital credit cards, the problems could be solved in an instant with the help of contextual chat support.

The AI integration with the digital cards also helps in regular payment reminders and ease of tracking transactions which was difficult by maintaining pages of transactions before.

Future Of Credit Cards

The digital cards are also no different from the plastic money or physical credit card we already use, with the sixteen-digit number, a CVV and expiry date. A digital/virtual credit card can be used in a similar way as the UPIs and scanners like Google Pay, PayTM, etc., are already in use. They do offer a higher level of security, ease of set-up and usage while the initial offers and benefits being the same.

The new radio technology called NFC (Near Field Communication) is the reason digital credit cards are emerging rapidly in the market. NFC is a lot similar to WiFi or Bluetooth which helps in the contactless transaction with just a tap on your mobile.

From a joint venture between State Bank of India and GE to individual banks like ICICI Bank, Citibank, Axis Bank and HDFC bank have launched virtual credit cards to facilitate e-commerce in India, which is a major force for digital credit cards.

With the higher security and verification procedure, wider payment options, and better rewards there will eventually be a shift to digital credit cards in the future but for now, physical and virtual cards will coexist.