What Are Virtual Credit Cards And How Does It Work?
Virtual Credit Card: Virtual credit cards make your information more secure, but they can really only be used for online shopping. Here’s all you need to know about virtual credit cards.
Virtual credit cards are an exciting step towards smart company spending. They give businesses a more secure, more personalized, and more trackable way to pay for things online.
Virtual cards let employees pay for the things they need right from their desktop. They’re quick, completely safe, and far easier for finance teams to manage.
What is Virtual Credit Card (VCC)
A virtual credit card (VCC) is essentially a disposable version of your static debit or credit card that, when used for online purchases, can reduce the likelihood of credit card fraud.
A VCC’s usefulness lies in the way that it shares card data. The physical data printed on your card (credit card number, security code, address, and expiration date) are always the same and, accordingly, are subject to storage and misuse by hackers.
Virtual credit cards provide online retailers with dynamic information. This is so because every time you pay using a virtual credit card, the verification data is different.
A virtual credit card helps to reduce fraud because of the way it shares your card data. As mentioned, the card only contains a number – that means no security code and no expiration date – and the number changes each time.
For security, most standard physical debit or credit cards now contain an EMV chip, which creates a unique transaction code for each purchase. The chip was implemented to make it harder to capture sensitive information.
Virtual credit cards work very similarly as they also create a token with each purchase, but they have the added feature of only containing dynamic information.
This not only makes it more difficult for hackers or fraudsters to get hold of your data in the first, but it also prevents them from being able to do anything with the information they find.
Typically, finding out the expiration date, security code, and card number of somebody means you can use their details for online transactions, which makes online shopping a risky business.
Even if the merchant themselves doesn’t take their data, they could get hacked by a third party. Using a virtual credit card means the number found will be meaningless.
Many virtual credit cards also come with extra features. Most companies offer a spending cap, which restricts the maximum total value of any transaction and therefore limits the damage of potential fraud.
Other common features are a ‘valid through’ date to stop the card from being used after a certain point, and also the option to automate bill payments.
Pros and Cons of Virtual Credit Card (VCC)
Subscriptions Harder To Manage
Refunds Can Cause Problems
How to Get a Virtual Credit Card
There are two main ways to obtain a virtual credit card: through a bank, you’re already a customer at or through a third-party provider. The best options for both these categories are listed in the next section.
If you’re already a customer at a bank that happens to offer virtual credit cards, the process is straightforward since you already have an account with them.
Most banks won’t make you fill out a lengthy application, wait a long time, or even undergo a credit check – you’ll just have to register for the service online and go through some security checks.
On the other hand, if you need to use a third-party provider, the process is slightly more complicated. You’ll need to sign up for the service and connect a source of funding, like a bank account or debit card. However, the application process is still relatively quick and easy.
Third-Party That Offers Virtual Credit Cards
As the name suggests, Privacy focuses on confidentiality and security features. It can be used as a smart virtual card, browser extension, or mobile app.
It’s also completely free, including no fees or charges for using your card. Although while you’re on the free version, you can only create up to 12 cards per month.
But you’ll have access to all the main features, including the ability to set spending limits, create single-use cards, use the browser extension, and access data through an API.
Privacy makes most of their money through charging merchants that process the payment, making the service free to the user. They also have paid versions.
The premium version gives access to more features, most importantly the chance to create up to 36 cards per month. That’s more than one a day, so if you’re going over, you might want to check your spending habits.
You’ll also get 1% cashback on purchases, priority support, and the option to hide transaction info from merchants, all for $10 per month.
There’s also a ‘Teams’ version, which is designed for businesses rather than individuals. This version allows you to create up to 60 cards per month, as well as receive dedicated account management and transaction limits.
Privacy promises more features to come, including multi-user support and exportation of accounts from services like Quickbooks and Xero.
Instead of making subscriptions more difficult, Privacy makes this unique feature an advantage. Having a different security code for each transaction makes it easier to cancel your subscription service – all it takes is one click.
Many big banks offer virtual credit cards as a free amenity. Capital One’s is called ENO, and Citi has a standard unnamed service of its own. If you’re unsure if your card issuer offers virtual cards, just give them a call and ask.
For those with banks that don’t offer virtual credit cards, there are third-party services that will work with your existing cards. Entropay is a popular service that allows users to create virtual, disposable credit cards for free. Final is another service that offers a suite of payment services, including virtual cards.
Many virtual credit cards also come with customizable features that may not be available on your standard credit card. For example, you can set “valid through” dates, spending caps, and automate bill pay.
Whichever one you decide to use, you can rest assured that your online shopping just got a little safer.
Alternatives to Virtual Credit Card
There are also a few options that are similar to virtual credit cards but slightly more user-friendly.
Bank of America Digital Wallets
Virtual credit cards are intended to make your information more secure, but they can really only be used for online shopping.
So, pair a virtual credit card with one of the most rewarding physical cards (and pay both off in full every month, of course) and you’re information will be a little safer.
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