What Are Virtual Credit Cards?

By: First Union


What Are Virtual Credit Cards?

A relatively new concept, a virtual credit card is a temporary card that you use while doing your online shopping. They are in essence disposable, which means that they offer greater protection than a regular credit card does. Your actual account number is not nearly as vulnerable when using a virtual credit card over a standard card. And with identity theft on the rise, taking precautions as far as safeguarding your account number is so important. If for example, a company experiences a data breach, because you utilized a virtual credit card, your information is by and large safe. In this article, we take a closer look at what a virtual credit card is and how they work.

How a Virtual Credit Card Works

Some credit card companies will offer virtual credit cards to their clients. You would then request to activate this virtual feature through your issuing bank. This will result in you receiving a random card number along with the expiration date and security code. These numbers are tied to your actual credit card account and yet the numbers are not reflective of your permanent card account numbers. It will show up on your statement just as any other credit card payment would.

More and more users are requesting virtual credit cards, as this type of disposable card does help to protect sensitive credit account information. So let's say that someone does manage to steal your credit card info, as it is a disposable credit card you will just have to cancel that particular virtual account and you don't have to go through the hassle of having to cancel your permanent card and thereby get an entirely new account number. In some instances, the card issuer will issue the card as intended for one-time use only. So in this way, if someone does try and illegally use the card after that one time, it will no longer be a valid account number.

Now, not every credit card company offers this virtual card feature. However, if your credit card is somehow stolen or gets lost and used in an authorized manner, because of the Fair Credit Billing Act, you are only ever liable for up to fifty dollars of what was charged on your stolen card. That said, there is a process involved with disputing the charges, canceling your card, and getting a new one. The process in and of itself can be a rather lengthy and tedious one. A virtual credit card, on the other hand, avoids such a process and your original credit card account number remains intact.

Some Disadvantages to Virtual Credit Cards

There are some drawbacks to using a virtual credit card when shopping online. The main one being, that they are only designed for online use. In other words, you cannot use the virtual card when physically going to a store or retail center and purchasing there.

Additionally, let's say you want to return an item purchased with your virtual card. In many instances, the retailer will have to put the money back on the card used to make the original purchase. If the card's expired, then this may make it impossible for you to do a return and get your refund.

Another obstacle that some have experienced when using a virtual credit card comes with the verification process. If for instance, you book a hotel room with the virtual card, and then this expires before you staying at the hotel, this could present somewhat of an issue. And given that the virtual credit card does have a different number than the actual card, it might be hard trying to prove that it's from the same account.

Getting a Virtual Credit Card

Currently, only 2 major banks offer virtual cards: Capital One and CitiBank. Others will give you separate account numbers for using with different merchants. The steps to go about getting the virtual card are relatively simple:

  1. You first of course need to apply for and get approved for an actual credit card, as virtual cards are attached to a standard card. Many of the major card issuers do have a virtual option, including American Express, Visa, and Mastercard.
  2. Log into your online account and click on settings. Citibank and Capital One have visible "Virtual Card" options for you to select. For some other issuers, you may need to do a bit of searching for "virtual credit cards." This should be found somewhere within your settings.
  3. Depending on the card issuer, there may or may not be a separate app that you will have to download to access your virtual credit card. Some banks will let you do it right through the existing app and/or website. Check and see what the bank's requirements are to this end.
  4. A 16-digit virtual credit card number will then be generated for you to use. With Capital One, for instance, you will get a new virtual card number whenever you go to request one. Others, Like American Express, give you a separate number for each merchant.
  5. With some issuers, you will get to determine how long you want that virtual number to be valid. If it is a card designed for use with a specific merchant, then you might not have a choice as far as how long the number remains valid.
  6. You will then receive the requisite expiration date as well as the security code. You can go ahead and start using your virtual card online just as you would your regular credit card number.

Each issuer may have its process for getting your virtual credit card. So the above could differ slightly depending on which company you're working with. Regardless, it is quite simple and convenient if you are interested in going this route for online purchasing.

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