If you’re a consumer who shops online, you likely have heard of the virtual credit card and maybe wondered how they work.
In short, the virtual credit card is one that enables you to shop for a purchase without divulging your actual credit card account number.
They may be temporary or long-term. No surprise there: they’re primarily used for buying goods and services online.
What is the Virtual Credit Card All About?
This is essentially a credit card number that is usable on your account but varies from the actual number on your card.
Occasionally (as with Capital One’s Eno), this virtual number may be created by a third party in real time and perhaps reworked every time you make a purchase. Having a virtual credit card can help safeguard your real credit card information while shopping on the phone or the web.
There are various ways that thieves steal your information, but this temporary, randomly generated credit card number—a token—is one way of keeping your information safe when buying something over the phone or online.
How do you Use a Virtual Credit Card?
Virtual credit card numbers are tied to a current credit card account and are randomly generated so that your actual bank account information is not divulged on the internet.
To a merchant, the numbers are as good as a regular credit card number. Cardholders, depending upon the issuer, can request a virtual card number through the internet using their credit card account.
Once a virtual card number is established, cardholders have access to such numbers immediately and can request spending limits, among other customizations.
Why would a consumer use a virtual card number?
From the privacy side, virtual credit cards minimize the risk of fraud by offering an added layer of enhanced protection to consumers and businesses conducting transactions online.
For individual consumers, virtual card numbers provide increased anonymity as well as protect confidential banking information and limit data tracking by advertisers.
For businesses, virtual card numbers automate cash flow management and improve fraud protection, controlling vendor payments and safely extending spending authority to employees and contractors.
In general, virtual credit cards are a great option for all those who shop online and need a little more protection from the threat of being hacked.
Pros and Cons of Virtual Credit Cards
Using virtual credit cards may be convenient, but there are some drawbacks to consider. These are the most notable pros and cons to expect if you use a digital credit card:
Pros
- Your long-term payment and personal information are safer: Even if an would-be hacker obtained your information from a virtual credit card transaction, the account number will not be connected with your identity and will probably expire before they can cash in.
- Your account is of low risk for hacking: It won’t be likely that your information will be stolen, which would mean closing your credit card account, ordering a replacement card or resubmitting all of your recurring payments.
- Your transactions are credited to your account: When you link your virtual card to your actual credit card, transactions are traceable and will appear in your normal bank statement as valid purchases.
- Tokens can be either permanent or temporary: Your card issuer may permit you to establish how long your token is open or to assign a spending limit. Both are convenient features for any joint credit card accounts or if you prefer to use a token repeatedly on a subscription, like Netflix or Audible.
- Your refunds will not be affected:With even a single token, refunds happen as usual with a virtual credit card when it’s linked to your credit card account.
Cons
Virtual cards are effective only for online and phone transactions. Currently, you can use virtual cards only while purchasing something over the internet or on the phone.
- Problems arise if you don’t link your virtual card to your account: Without linking your virtual account to your standard credit card account, you may have a problem when attempting to get a refund. Since your account will not have something to be credited back into, your options may be reduced to an exchange or store credit.
- Booking some services will be more complicated: There can be issues if you book a service with a virtual card, e.g., flights, rental cars, or hotels.
Most of these kinds of companies will request the card used to make the booking, so there could be a small extra hassle at check-in, e.g., a call to your bank.
Are Virtual Credit Cards Safe?
Briefly, yes. Virtual card numbers issued by credit card companies ensure safe protection by assigning a 16-digit number with a corresponding real account. Cardholders may even assign a PIN (personal identification number).
The majority of virtual card numbers need to comply with PCI DSS (payment card industry data security standards), which offer secure transactions among holders of virtual card numbers, the issuer of the credit card, and the seller being paid.
How to Get a Virtual Credit Card
With most large issuers, you can have virtual card numbers usable for any credit card they issue, provided you take the necessary steps to activate them on your account.
So, your current credit card numbers may already be out there virtually, and so may the numbers on any new cards. Look at your online account or app or contact customer service to learn how to get a virtual number for your card.
Virtual credit cards by issuer
If you’re considering virtual card numbers to help shield your account, you’ll be interested in knowing which card issuers and credit cards offer this service. Examine how the following card issuers use virtual card numbers and make them available to consumers.
- American Express: American Express offers virtual card numbers for valid U.S. Amex credit cards with good standing.
- Capital One: Capital One offers virtual credit cards through an in-browser extension, Eno.
- Citi: Citi allows eligible cardholders to enroll online and use its website to generate a unique token whenever needed.
- J.P. Morgan: Virtual credit card numbers are offered to business owners who have an eligible J.P. Morgan commercial card.
- U.S. Bank: Virtual credit card numbers are offered to business owners with an eligible U.S. Bank corporate card.
- Brex: The Brex Card offers unlimited free virtual credit cards for staff.
- Divvy: The BILL Divvy Corporate Card includes an unlimited virtual credit card number for web usage.
The Bottom Line
Virtual credit cards are able to conceal your actual credit card number to keep the sensitive information of your account secure.
Your usage of virtual card numbers might even be done automatically on your part, depending on your credit card issuer. Keep in mind, buying with a standard credit card is not necessarily risky, and that’s true regardless of whether you’re shopping in person or on the web.
That’s because credit cards typically offer zero liability for fraud, so you’ll not be held accountable for unauthorized charges in either case.
