When there is a demand for privacy and security, the tech world comes up with a solution to make the shopping experience for the customer a pleasant one. When credit card owners are skeptical about their credit card information, either while using it with a new online merchant who is offering a better deal but having, or if an unavoidable friend asks your credit card for a single use, there is a new technique called virtual credit cards to solve these issues. A virtual credit card is a single-use visa or a debit card which is integrated to your main credit card, which can be used only once. Once you use the particular temporarily generated visa or a master 16 digit number, it becomes invalid for the second use. It is flexible to set the expiry date or purchase limit. So that your main credit card will be safe and secure in case if a fraudulent merchant tries to scrape down your account with the temporary card information he has. Bank of America, Citibank, Discover are the major players in providing virtual credit cards in the United States.
Advantages of Virtual Credit Cards:
- Virtual credit cards are normally free. Sometimes it is so cheap in comparison to the risk involved.
- Keeps your account information safe and secure. After a payment, a merchant has your billing address, card number, expiry date, but not CVV. But there are gateways which could even process the card when you type 000 as CVV.
- Providing the one-time use credit card number masks your real credit card identity.
- Cyber threats are increasing day by day, reputed merchants are even bullied by cyber threats and the credit card details are exposed. Using virtual credit card numbers increases your information security.
- Usually, it is limited to one provider.
- The customer can able to set the date and limit of the particular virtual card number. This will be useful for recurring payments, where a merchant cannot charge unwanted payments except the subscribed amount.
- When your real card is stolen you can get a virtual replacement immediately. For example has Barclays started offering this service to their UK Barclaycard customers.
What is a virtual credit card?
A virtual credit is exactly the same as your normal visa or mastercard, but with one big difference. You receive the card in electronic form but no physical form itself card itself. Imagine your credit card but on your computer showing you both sides of the card.This means that you can use it only for making online payment such as booking flights or hotels or buying on amazon or ecommerce websites.
The advantages of a virtual credit card are many. Some of the benefits include:
- Can't be stolen: As it is a virtual credit card it cannot be stolen or Skimmed.
- Reduce fraud: you can keep generating new virtual credit cards for example after every single use so that once its used it gets destroyed/inactive. This way no one can steal the credit card number and reuse it.
- You can generate unlimited virtual credit card which is perfect for using with different suppliers, for individual employees, individual purchases.
- It can be all managed electronically online.
- The costs are significantly lower due to reduction in fraud and also there is no need for replaying stolen or lost cards.
- For large businesses which make significant online payments. They can use virtual credit card to better manage payments and also receive a rebate/refund on each credit card payment. For example if you spend €10000. You will receive a refund of €100 back.
Disadvantages of Virtual Credit Cards:
Even Though Virtual credit cards look like a secure solution, it is not the ideal perfect solution to avoid online frauds. The reasons for why it is not a perfect solution is listed below.
- Virtual credit card feature is not provided by all the banks. Only a few number of banks provide this feature.
- Major institutions like JP Morgan Chase, Capital One, American Express and Paypal, Deutsche Bank, Danske Bank, are not offering the service or discontinued because of the cost and problems involved from the provider point of view.
- Cannot be used offline. Most of the suppliers provide only for online purchases.
- Most of the cases customers forget their virtual credit card number they use and it creates a problem when their card details needed to be verified. It proved to be a hassle in cases like when you book tickets in theaters, rental cars etc.
- In case of refunds or when you need to return your purchase using the virtual card number which could have expired, then getting the refunds becomes a painful process.
- It is not a 100% fool proof to fraud as when the fraudulent merchant didn’t ship the product.
- You need to be a real tech savvy to use this feature, as it needs customization for each and every purchases. If a customer did not configure the expiry date and amount ceiling, then the point of using a virtual credit card becomes null.
- Making recurring payments is difficult using a virtual credit card.