What Is a Virtual Credit Card?
A virtual credit card is a type of payment card that can only be used in a digital way. It is like any other credit and debit card, except instead of using your actual bank account information, you enter the unique details of the virtual credit card number into your bank account. The main advantage to this is that stolen cards cannot easily be used with your actual bank account information attached to it because no one can steal your personal banking data.
Virtual cards are similar to prepaid cards, which are offered by banks and retailers for those who need a quick store withdrawal or cash advance at an ATM without a long wait at their local branch. Many banks will offer both types of cards under a single account.
Virtual cards are also similar to gift cards, which are given to friends and family members as presents. Unlike gift cards, however, virtual cards cannot be used to make purchases in real stores or online. Instead, their purpose is typically to provide users small daily amounts of spending money for small transactions such as online gaming or other time-limited visits.
Because virtual card numbers are tied directly to your digital bank account, there is nothing stopping thieves from using them fraudulently if they have gained access to your digital information.
How Do Virtual Credit Cards Work?
If your credit card issuer provides a virtual credit card feature, you can request one through your online account with the bank. You can then download the virtual card immediately for use as a digital version of your real credit card.
To protect your identity from would-be thieves, the bank will issue you a new virtual credit card number for each transaction. The issuer will only incorporate this newly generated number into their system when you make purchases with your new digital credit card. This way, if someone steals that information before you even use it, they’ll be unable to spend any money without also stealing your corresponding physical credit card.
Can Virtual Credit Cards Help Protect Your Identity?
Disposable card numbers can add an additional level of security in an age when retailer data breaches seem to be commonplace.
The rapid growth of online shopping has exploded in recent years, as more people turn to the convenience and opportunity for larger ticket purchases that the internet offers. The downside to shopping online is that it’s made data breaches and identity theft easier than ever before.
With our credit card information stored on computers, which are inherently vulnerable to hacks and malware, no one is safe from having their personal information stolen.
Internet transactions can also be completed without showing any of your personal identifying information for security reasons. This can include your address or name if you use a virtual credit card number during checkout instead of a physical credit card with numbers that can be seen by the merchant’s employees at checkout.
What Are the Drawbacks of Virtual Credit Cards?
Because virtual credit cards are designed for online and other card-not-present transactions, there are some situations in which using a virtual number could backfire. For example, if you need to identify yourself in order to receive a shipment, use a virtual card at the point of sale, or call customer service.
If you are concerned about what types of scams might be possible with online card transactions, and how they compare with physical cards that can be lost or stolen and then used fraudulently:
– Scammers may not recognize fake numbers as “real” since they’re not linked to a physical card.
– They may avoid using the number altogether due to lack of confidence in their ability to detect fraud. Alternatively, they may switch their tactics from outright identity theft towards small value transactions like gambling or currency exchanges.
Is a virtual card different from a digital wallet?
Yes. A digital wallet operates similarly to a virtual card, but there are some noteworthy differences. Virtual card numbers are not tied to an individual person, while digital wallets are tied to the username of a specific user. The two cards can also be used in opposite ways. A digital wallet is meant for storing funds, but a virtual card can usually be used at any time and is often used for regular purchases. The reason the two have different functions is that the technology behind them has progressed in different directions. Some people use their virtual card as their main bank account and would not want anything else taking up space on their smartphones or computers, so they rely primarily on virtual cards for payments instead of digital wallets for control over cash flow.
A virtual card is a fully functional virtual credit card that can be linked to a bank account and used for payments. Also similar to the functions of a digital wallet, it is possible to use the virtual card to purchase goods, and it may be used for regular purchases as well. One of the main features of a virtual card is that it works just like a real credit or debit card in all functions except that it does not have an individual’s name printed on it, so there is no need to carry around physical cards (which might get lost). Instead, users simply log onto an online portal or mobile app when they are making purchases and set up one time settings.