A virtual credit card can improve the security of account holders when making online purchases. Virtual credit cards are similar to physical credit cards but offer further protection and peace of mind by preventing sensitive details from falling into the hands of criminals.
What is a virtual credit card?
A virtual card is a unique card number that's generated in a digital format and is associated to your account.
A user can enter this 16-digit credit card number upon online checkout instead of their physical credit card number. The transaction then appears on the account statement just as if a physical credit card had made the transaction.
The benefits of virtual credit cards
Some virtual credit card providers allow users to set a separate expiration date and credit limit from their physical credit card. Virtual credit cards offer an extra level of security against criminals attempting to steal information via insecure connections or data breaches.
If the account holder needs to cancel their card for any reason, a virtual credit card can make the process much easier. You can usually lock or delete them with a click if they become compromised.
When a physical credit card becomes lost, stolen, or compromised, the account holder has to cancel it, wait for a new one to be issued, and then enter a dispute process. With a virtual card, the cancellation process is much more straightforward. Upon cancellation, the account holder can maintain access to their credit account through their physical card.
Things to consider when getting a virtual credit card
Virtual credit cards aren’t entirely fraud-proof. It is still important that users remain vigilant with their credit accounts, checking their statements regularly for any unauthorized transactions.
Virtual credit cards are also designed specifically for online and card-not-present transactions. These are transactions where the merchant does not see the physical credit card used for the purchase. Examples include electronic, mobile, telephone, and mail order transactions.
The process of returning items could also be more difficult. Many merchants require the same card number to process refunds. If you used virtual credit card details for the purchase, and these have since expired, then you may not be able to receive a monetary reimbursem*nt and will have to accept store credit instead.
There could also be complications when using virtual credit cards for transactions that require verification at a later stage, such as car rentals or hotel bookings. As the virtual and physical credit card numbers would not match, this could cause issues for the merchant when verifying that the transaction came from the same credit account.
How to get a virtual credit card
Brex gives you instant access to your virtual corporate credit card upon approval. This allows you to issue virtual cards to each member of your team, with the ability to control spend by setting specific limits.
Alongside the additional protection offered by a virtual credit card, the Brex corporate credit card offers 24/7 fraud monitoring and protection.
FAQs
What is a virtual credit card? A virtual card is a unique card number that's generated in a digital format and is associated to your account. A user can enter this 16-digit credit card number upon online checkout instead of their physical credit card number.
What are the facts about virtual cards? ›
The technology masks your actual card information, keeping it hidden from businesses and protecting you against fraud. Some virtual cards expire after every transaction, so if anyone accesses your card information, that number would be useless to them. Other virtual cards, like Google Pay, have a longer duration.
What is a virtual credit card and how does it work? ›
Virtual credit cards are digital credit cards that function like physical credit cards—but without the plastic. Rather than providing the same card number to multiple vendors, companies can limit their exposure to potential fraud by generating different 16-digit card numbers and expiration dates for each transaction.
What are the risks of virtual cards? ›
Additionally, virtual credit cards aren't directly connected to your physical card or your account details, cutting back on the risk of fraud. Still, information from a virtual credit card might be as prone to hacking as information from a physical credit card.
What are the pros and cons of virtual card numbers? ›
Traditional credit cards offer convenience and rewards but come with higher interest rates and are more susceptible to fraud. On the other hand, virtual credit cards offer added security and the ability to set spending limits but may be less widely accepted and may come with additional fees.
How does a virtual card protect you? ›
Virtual card numbers are coded for a specific supplier and a set amount. They can't be processed without the correct supplier credentials and they can't be charged for an unauthorized amount.
What are the disadvantages of virtual payment cards? ›
Limited use: The main disadvantage of having a virtual debit card is that it can only be used for online transactions. So, if you want to use it for making purchases in-store or withdrawing cash from an ATM, you are out of luck!
Can I withdraw money from virtual credit card? ›
Unfortunately, if you don't have a physical card, you cannot get money off a virtual card through an ATM. However, you can link a virtual card to your physical credit or debit card or mobile wallet. This action makes it possible to withdraw cash at ATMs.
Can virtual cards be traced? ›
Charges can be made with the card numbers online or by telephone, but they cannot be made in person. When a card number is generated, the charges are routed to the original credit card number. However, the virtual number cannot be traced back to the original card, and it will not work after the purchase.
Can a virtual credit card be hacked? ›
The Bottom Line. Virtual credit cards are designed for online shopping and provide an extra layer of security—making it harder for cyber attackers to gain access to your personal information. You can contact your credit card issuers to see if it's an option for any of your accounts.
Major credit card companies like Mastercard, Visa, Capital One, and American Express issue virtual credit card numbers as a way to provide an additional layer of security for online purchases or to limit spend to an account. Virtual credit cards are completely legal and available for mainstream use.
What is the limit on a virtual credit card? ›
The number you assign to a virtual card is the purchase "limit" or the maximum amount that can be used before transactions begin declining. This means, setting the limit on your card to $50 doesn't mean you loaded $50 onto the virtual card.
What is the point of a virtual card? ›
The benefits of virtual credit cards
Virtual credit cards offer an extra level of security against criminals attempting to steal information via insecure connections or data breaches. If the account holder needs to cancel their card for any reason, a virtual credit card can make the process much easier.
How many times can a virtual card be used? ›
Virtual cards can be reusable or single-use only, so they are ideal for one-time or recurring payments and subscriptions. Virtual cards can be used for things like paying your phone bill, Netflix subscription, or making one-time purchases on sites such as Amazon.
What is the use of virtual card? ›
Virtual credit cards are a digital version of your physical credit card. They generate a unique credit card number for you to use in place of your physical card number, preventing the merchant from storing your credit card information and keeping your financial data more secure.
What are the benefits of virtual card payments? ›
Virtual card payments eliminate the need for suppliers to manually handle checks and associated paperwork as well as reduce the time spent on collections and following up on overdue invoices. Virtual card payments also simplify the reconciliation process.
