How virtual credit card numbers protect your information
Quick insights
- Virtual credit cards are digital versions of a traditional plastic or metal card.
- They are connected to the same account as your physical credit card.
- Virtual credit cards generate a new 16-digit number, expiration date and security code for each transaction.
Many customers prioritize safety when making payments online. Virtual credit cards can be a safe way to make payments online because they don't use your card’s real information to make purchases. Instead, they generate new information for individual purchases.
In this article, we’ll discuss how virtual credit cards work and how they can help protect your credit card information while making payments online.
Understanding virtual credit cards
Virtual credit cards are digital versions of traditional physical cards that do not use your card’s actual information. Instead, each transaction has a unique token. This means that each digital transaction uses a different set of numbers.
While the virtual card is tied to your credit card account, your actual card details are not needed when you use it. However, you can still benefit from you credit card’s available features. For example, you could earn rewards on eligible purchases.
The specific features and usage rules of virtual credit cards can vary between different card issuers, so it's important to check the terms and conditions of your specific card. Also, not all card issuers offer virtual cards.
Note that Chase does not offer virtual credit cards.
How virtual credit cards offer security and protection
Virtual credit cards use tokenization and encryption to mask your card’s data and securely transmit it. Your card’s real numbers are kept in a digital vault. When you use a virtual credit card, your credit card number is replaced with a randomly generated number, or token, for each transaction.
Encryption converts the data into a code that can only be interpreted with the correct decryption key. When a transaction is processed, the token communicates with the vault to verify and complete the transaction.
Additional ways that virtual credit cards can offer security benefits include the following:
- Protection: They can provide peace of mind when making transactions online. If there’s a data breach at a retailer where you used your virtual credit card, your card’s real numbers may not be exposed.
- Set restrictions: Some virtual cards allow you to set spending limits and custom expiration dates, meaning they can’t be used after a certain date or for more than their allotted amount.
- Controls: Depending on your card issuer, you may be able to lock, change or delete your virtual card at any time without impacting your ability to use your credit card.
Tracing virtual credit cards
A notable feature of virtual credit cards is their lack of traceability. Your virtual credit card cannot be traced back to your account. The card details provided with the virtual credit card are in no way tied to your account, so if intercepted, they might help protect your actual account details.
The fact that your card numbers cannot be traced may pose challenges in certain situations. If you use a virtual card to purchase something and then want to return it, you won’t have the card’s numbers to verify the purchase.
Similarly, if you’re checking into a hotel or renting a car and need to produce the card to verify the purchase, you won’t be able to. When making purchases with a virtual credit card, consider if there will ever be a need to present a physical card as part of the transaction.
Benefits of using a virtual credit card number
It can be convenient to use virtual credit cards, especially when you consider their compatibility with online shopping and digital wallets.
In addition to their convenience and global acceptance, they may provide an added layer of security. Because your actual card numbers are never shared with merchants, your account information could be protected in the event of a data breach.
Your virtual credit card could also help you earn rewards points. Purchases made with a virtual credit card usually earn rewards or points the same as traditional credit cards. Check with your credit card issuer whether virtual card options are available.
How to use virtual credit card
Once your credit card issuer approves you for a virtual credit card, you can begin using it. This feature is typically used for online transactions where your physical card is not present, but you can also usually upload your virtual card to your phone’s digital wallet as a contactless payment option.
Virtual credit cards are similar to digital wallets in that they both often use tokenization to protect your credit card information, but they are not the same thing. Two key distinctions include:
- Virtual credit cards can be used outside of a digital wallet as well.
- Not all credit cards uploaded to your phone’s digital wallet are virtual credit cards—rather, you are uploading your credit card’s information to your phone for convenience.
One potential drawback to using a virtual credit card is that it can be difficult to return items bought with a one-time virtual credit card token. It can also potentially cause confusion when you make a reservation online and need to verify it with your card number.
Common uses for virtual credit cards include ongoing vendor payments, accounts payable transactions, claims payments and travel payments for work-related trips.
In summary
Virtual credit cards can provide a safe and secure way to make transactions online. They can be locked or deleted at any time without affecting your ability to use your card.
Virtual credit cards use random numbers and codes that cannot be traced back to your actual credit card. Not all credit card issuers offer virtual credit cards, so check with yours if you’re interested in getting one.
