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Learning objectives

  • Understand the three fundamental lifecycle states of a virtual card
  • Know who (user, system, compliance) controls transitions between states
  • Learn how to design your product UX and backend around lifecycle changes
  • Be able to build workflows that prevent user confusion and operational risk

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Virtual card lifecycle: the big picture

Virtual cards follow a strict, state-based lifecycle: Freezing is reversible. Termination is not. Let’s define each state clearly and explore why it exists, how transitions happen, and what you need to do at each step.

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ACTIVE

What it means: The card is fully functional and can be used to:
  • Make payments
  • Receive refunds
  • Be topped up or withdrawn (if supported)
How it enters this state:
  • After creation completes, when the virtualcard.created.completed webhook arrives
  • After being unfrozen (if previously frozen)
What you should do in your product:
  • Display the card as “Ready to use”
  • Show full balance and transaction options
  • Allow users to take actions: spend, fund, freeze
  • Monitor spending behavior
Backend logic to support this state:
  • Permit authorization requests
  • Accept webhook events for transactions
  • Track usage patterns

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FROZEN

What it means: The card is suspended. It cannot be used for:
  • Purchases
  • Top-ups
  • Withdrawals
Why cards are frozen: Can frozen cards be reactivated? Yes. They can be unfrozen manually or automatically. What you should do in your product:
  • Show the card as “Frozen” (clear visual state)
  • Allow unfreeze (if policy permits)
  • Inform the user why it was frozen, not just that it was frozen
  • Block top-ups, spending, and display warning on UI
What not to do:
  • ❌ Don’t auto-terminate a frozen card unless the rules allow it
  • ❌ Don’t hide the card, make it visible, but read-only

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TERMINATED

What it means: The card is permanently deactivated. It cannot be:
  • Used
  • Funded
  • Reactivated
  • Returned to frozen or active
Why cards are terminated: Important system rules (example):
  • A card is terminated after repeated decline violations. The default is 3, and each company’s limit can be set from 1 to 10
  • From the second violation, a $0.75 decline fee applies
  • Frozen cards can also be auto-terminated after rule violations
What you should do in your product:
  • Clearly show the card is “Closed” or “Inactive Permanently”
  • Prevent any further action
  • Display final balance if relevant
  • Provide option to create a new card
  • Show termination reason (in plain English)
What happens behind the scenes:
  • Webhooks will still be fired for reversals or refunds
  • System may refund final balance (if applicable)
  • A new card must be created if needed again

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Product design checklist per state

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Common lifecycle pitfalls

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Knowledge check

Which of these is true?
  1. A terminated card can be unfrozen.
  2. A card must be frozen before being terminated.
  3. All cards start in the frozen state.
  4. Cards can move directly from active to terminated.
Answer: Cards can be terminated without being frozen first, especially if flagged by fraud or abuse logic.

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Key takeaways

  • Every card has a clear state: Active, Frozen, or Terminated
  • You must reflect state transitions clearly in your product
  • System rules can trigger transitions automatically. Always build with them in mind
  • Users will trust your product more if they understand what’s happening and why