A new firmware update of the Switch today bumps the device to Version 20.0.0 and adds the Virtual Game Card feature some of us were waiting for.

• Virtual Game Card
  
  • Purchased Nintendo Switch digital software, DLC, and some free software, are now virtual game cards and displayed in a list in this menu.
  • You can virtually load and eject virtual game cards between up to two Nintendo Switch systems.
  • Virtual game cards can be lent to others in the same Nintendo Account family group. For more information, see Virtual Game Card Guide.
• Online License Settings has been added.
  • When turned on, you can play downloaded software or DLC you've purchased while the system is connected to the internet, even if you don't have the virtual game card loaded.
  • For more information, please refer to the details about the option on the System Settings screen

More info at: https://www.nintendolife.com/news/2025/04/nintendo-switch-system-update-20-0-0-is-now-live-here-are-the-full-patch-notes

And what were virtual cards?

Open the HOME Menu and select Virtual Game Cards.

View your digital game library.

Select the game you want to load – and start playing!

Source

I wish I could swap virtual game cards to other users outside my NSO family account, like with a physical card, but I get why they don't allow this as that would reduce software sales from people just passing around the same copy of a game between friends and family.

Still, it's better than nothing, a very cute and "Nintendo" way to tackle the problem.

Once Nintendo switch off the servers perhaps in 10 years you won't be able to download the software and its all gone as with all digital purchases. I'm not a fan of digital purchases as I tend to be the type of person who buys a game plays it through and sells it on and get most of my money back. They have nicely packaged digital purchases here but really the only digital purchases I make are steam and steam support for digital purchases is amazing. I've had games maybe 15 years or more and still downloadable and playable. Typically with major enhancements too free of charge so they play much better on later hardware. It's really the only digital platform I will invest in. I wonder what happens with my wii u purchases now? Not that I made many.

Physical or noo buyy.

Also missed this remark while making the OP

Note that the use of “Primary Console” has been deprecated with the transition to virtual game cards, and “Pass-enabled console” will be used instead. On a console set as the “Pass-enabled console” for a user, all users on the console can access certain subscriptions or passes for some software. For more information, see How to Set or Change the Pass-Enabled Console for a Nintendo Account.

It sucks that I can't add multiple virtual cards at once. Everytime I add something I get thrown back into the main menu and have to go to virtual game cards again.

I want to try this with my friend. What's the simplest way to accomplish this of we aren't on the same Nintendo Family Account?

"Note that the use of “Primary Console” has been deprecated"

Sad.

Pretty cool on paper.

Complete trash. I’ve lost access to my entire game library unless my primary console is in Airplane mode - annoying enough. But worse than that, no more online play for games like AC New Horizons and Xenoblade Chronicles X. And this is whether or not you opt out, you still lose the old feature.

So the family sharing the way it was is gone, and they’ve scrubbed their FAQ. Nintendo removed features that were important to my family.

It’s one thing to establish different rules at the beginning of a generation. But to change them while the generation is still happening, when people are still playing games, like Xenoblade Chrobicles X, and can no longer access all of the features - such as being online at the same time or playing multiplayer together - that’s just poor customer support. I feel cheated by them. This is such a backward step for Nintendo.

This update is top tier fucking bullshit.

EDIT:

Confirmed that if you don't update your Switch, you can still play multiplayer together on shared games - still able to connect a shared Xenoblade Chronicles X on both Switches at the same time. So, DO NOT update your Switch if you're family sharing. Hopefully enough people complain that Nintendo re-adds proper family sharing. But otherwise, I'll see what I can do with their customer service to perhaps get some kind of worthy concession (like a bunch of gold coins or something); in my experience, they've always been good in the past.