Virtual credit cards: A quick guide

Quick insights

• A virtual credit card is a digital representation of your physical credit card, which may offer a secure and convenient payment method for online transactions.
• With compelling features like single-use transactions and tokenization, a virtual credit card can offer peace of mind when making purchases online.
• You can use a virtual credit card in various ways like making purchases online or booking travel arrangements.

A virtual credit card can be particularly advantageous when shopping online, offering a modern and convenient payment method for digital transactions. Getting a virtual credit card can come with many benefits such as additional security, customization and integration with mobile wallet apps like Apple Pay^® or Google Wallet^®. Overall, the flexible payment solutions and convenience of virtual credit cards can provide peace of mind for online shoppers and businesses.

What are virtual credit cards?

You may be wondering what exactly is a virtual credit card? A virtual credit card is a digital representation of a traditional physical credit card. It has similar components of a physical credit card such as the virtual credit card number, expiration date and security codes (i.e., CVV or CSC). Virtual credit cards are usually generated through banking apps or websites. Some financial institutions may give customers a free virtual credit card as part of their services, but it may be advisable to do research and compare different options.

Virtual credit cards vs. Digital wallets

Virtual credit cards and digital wallets typically serve similar purposes but function a little differently. Digital wallets, like Apply Pay or Google Wallet, store your payment information and allow you to make payments using your smartphone. You can use your digital wallet to make payments in-store where accepted, online or in-app purchases. Virtual credit cards are randomly generated credit card numbers linked to your existing credit card account. Virtual credit cards are mainly used for online purchases to enhance security by keeping your actual credit card details private.

Key features of a virtual credit card

A major feature of a virtual credit card is its strong security features such as one-time use numbers and the ability to set spending limits. Virtual credit cards can provide an additional layer of protection for online purchases and may help to reduce the risk of fraud and unauthorized charges. Many of the elements associated with a traditional physical credit card also apply to virtual credit cards including the need to make payments on time to avoid accruing interest. Here are a few key features of a virtual credit card:

• Privacy: Virtual credit cards can help protect your personal and financial info when making purchases online.
• Customization: You may be able to set spending limits for individual virtual credit cards or specify the maximum amount that can be charged to the card.
• Convenience: Virtual credit cards can usually be generated instantly through your bank's website or mobile app if your bank offers them. This can be an ideal solution for time-sensitive purchases.

Ways to use a virtual credit card

There are various ways to use a virtual credit card:

• Online purchases: When making purchases online, you can use a virtual credit card by entering payment information at the checkout page, just like you would with a traditional credit card.
• Single-use transactions: Generate a virtual credit card for a specific purchase and use it for that transaction. Once the transaction is complete, the virtual card will become inactive.
• Travel and hotel bookings: Virtual credit cards could provide added security when booking travel online. You can use a virtual card to protect your actual card details.
• Prepaid cards: Some virtual credit cards function as prepaid cards, which can allow you to load funds onto the card before using it for purchases.

Security features of a virtual card

Since virtual credit cards can only be used for online transactions, they can’t be stolen or lost in the same way as physical credit cards. Some of the security features of a virtual credit card are below:

• Tokenization: Virtual credit card numbers are typically generated through a process known as tokenization. This process replaces sensitive card details with a unique token.
• Single-use: Most virtual cards are designed for single-use or limited use.
• Real-time monitoring: Many virtual card services provide real-time monitoring and alerts.

Should you get a virtual credit card?

The decision to get a virtual credit card depends on your preferences, specific requirements and comfort level with online transactions. Here are a few factors to consider:

• Privacy protection
• Convenience
• Spending habits
• Single-use transactions

If you frequently engage in online shopping, virtual credit cards may be a valuable addition to your financial toolkit.

In summary

Virtual credit cards have the potential to not only simplify your online shopping experience, but they can also add much-needed versatility and convenience. If you are comfortable with making online transactions, a virtual credit card might be a good option. Virtual credit cards can provide confidence and control for cardholders when it comes to spending limits and accessing real-time monitoring tools.