The concept of a payment card without a physical card may seem paradoxical, but virtual and digital cards are rapidly becoming a significant segment of the payment landscape. As African banks and fintechs accelerate their digital strategies, the relationship between physical and digital cards is evolving in ways that have important implications for issuers, consumers, and card manufacturers alike.
What Are Virtual and Digital Cards?
The terminology can be confusing, so let us define terms. A virtual card is a card number (PAN, expiry date, and CVV) that exists only in digital form — it is never printed on a physical card. Virtual cards are typically issued instantly through a bank's mobile app or web interface and used for online transactions. They are popular for e-commerce, subscription management, and corporate expense control, where a unique card number can be generated for each transaction or merchant.
A digital card (also called a tokenised card or mobile wallet card) is a representation of a physical or virtual card stored in a mobile wallet — Apple Pay, Google Pay, Samsung Pay, or a bank's own wallet application. The digital card uses tokenisation technology to replace the actual card number with a device-specific token, enhancing security for in-store and online transactions.
Tokenisation: The Enabling Technology
Tokenisation is the technology that makes digital cards possible. When a cardholder adds their card to a mobile wallet, the card number is replaced with a token — a unique substitute number that is linked to the original card but cannot be used independently if intercepted. The token is stored in the device's secure element (a tamper-resistant chip within the phone) or in a cloud-based secure environment.
When a payment is made using the digital card, the token is transmitted to the merchant, who forwards it to the payment network for detokenisation and authorisation. This process happens in milliseconds and is transparent to the cardholder and merchant. The security benefit is significant: even if a token is intercepted during transmission, it cannot be used to make fraudulent transactions on a different device or at a different merchant.
Mobile Wallets in Africa
The adoption of mobile wallet-based card payments in Africa is at an early but accelerating stage. Apple Pay launched in South Africa in 2022, becoming available to customers of several major banks including Absa, Capitec, Discovery Bank, and Nedbank. Samsung Pay has been available in South Africa since 2019, and Google Pay (formerly Google Wallet) is progressively expanding its African footprint.
FNB launched its own proprietary mobile wallet — FNB Pay — which allows contactless NFC payments from compatible smartphones, even for customers whose phones do not support Apple Pay or Google Pay. This bank-led approach to digital card issuance reflects the recognition that waiting for global wallet providers to cover the African market is not a viable strategy.
Adoption barriers remain. The requirement for an NFC-enabled smartphone excludes a significant portion of the African population. Consumer trust in mobile payments, while growing, is not yet universal. And the merchant acceptance infrastructure — NFC-capable terminals — is concentrated in urban areas and modern retail environments.
The Physical vs Digital Debate
In the payment industry, the question "will digital cards replace physical cards?" generates heated debate. The digital-first advocates point to the convenience of instant issuance, the security advantages of tokenisation, and the environmental benefit of avoiding plastic production. The physical-card advocates note that digital cards require expensive smartphones, reliable battery life, and a level of digital literacy that cannot be assumed across diverse populations.
The reality, as with most technology transitions, is more nuanced than either extreme position suggests. Physical and digital cards are not substitutes but complements. A physical card provides universal acceptance (every card terminal accepts a physical card), no battery dependency, and a tangible brand presence. A digital card provides instant issuance, enhanced security, and the ability to transact even when the physical card is not at hand.
The most successful card programmes recognise this complementarity and offer both. A customer receives a physical card for everyday use and a digital card for their mobile wallet, with both accessing the same account and sharing the same transaction history. The physical card serves as the reliable default; the digital card serves as the convenient alternative.
Implications for Card Manufacturing
The growth of virtual and digital cards has prompted speculation about the decline of physical card manufacturing. We believe this prediction is premature, particularly in the African context. Physical card issuance volumes in Africa continue to grow, driven by financial inclusion programmes, new bank launches, and the ongoing EMV migration. The addressable market for physical cards is expanding, not contracting.
What is changing is the role of the physical card. As digital cards handle an increasing share of online transactions, the physical card becomes more firmly positioned as the in-store, ATM, and international travel payment instrument — applications where its reliability and universal acceptance are unmatched. The physical card is also evolving as a brand object: premium materials, innovative designs, and personalised touches that reinforce the cardholder's relationship with their bank.
At Cardzgroup Africa, we view the digital card trend not as a threat but as an evolution that deepens the strategic importance of the physical card. When a customer can transact digitally from their phone, the physical card they choose to carry becomes a more deliberate choice — and a more powerful brand statement.