Guest article by Alayna Pehrson – Digital Marketing Strategist at BestCompany.com
Credit cards have been an increasingly popular form of payment for years. The amount of online shopping purchases has also continued to rise. According to a 2016 survey conducted by the Pew Research Center, 79 percent of Americans have made at least one online purchase and 8 out of every 10 Americans are now considered online shoppers. With this high amount of online shopping activity, it’s no wonder that more and more credit card numbers each year are being compromised. Although credit card theft is becoming more of a concerning issue, it seems that a large portion of people still use credit cards for online purchases. This continual use of credit cards is why some card providers are now offering the virtual credit card option.
What are virtual credit cards?
A virtual credit card is a randomly generated 16-digit temporary number that can be used for online purchases. These card numbers are typically meant for one-time use and expire in a relatively short amount of time. Often, those who use virtual credit cards can set a minimum and maximum charge amount as well as when the card will expire. These card numbers were designed to enhance online shopper safety by reducing the risk of credit card and identity theft.
Benefits of using a virtual credit card
There are a few benefits of using a virtual credit card number over a physical credit card number for online purchases. These benefits include:
- Preset card expiration: Customers can set a time limit on when the virtual credit card will expire/when the credit card number will no longer exist. This ensures that the card will expire on that date which means that no one will be able to use the card after the preset date.
- Only primary card holder gets the virtual card option: No secondary card holders can get access to a virtual credit card, which enhances the primary card holder’s security as they will be the only one to make purchases using virtual cards.
- Cannot be traced back to physical card: It is incredibly difficult to clone or copy a virtual credit card because they are non-physical, the 16-digit number is temporary, and does not have any affiliation with the physical card number.
- Maximum spending limit: Those who use virtual credit cards can set a maximum spending limit. This ensures that if someone does get a hold of the virtual credit card, then they will only have so much to spend.
The downside of virtual credit cards
Although there are many benefits to using a virtual credit card over a physical number, there are still some negative aspects that accompany this innovation.
- Virtual cards are limited to online purchases: Virtual cards will not work if a purchase requires the showing of a physical card.
- Obtaining refunds may prove difficult: If a purchase is made using a temporary card number, then it is incredibly difficult to trace the purchase back to the physical card. Some stores provide a store credit option in this case.
- Often requires online accounts: A person often has to have an online account created with the provider before they can get access to a virtual credit card.
- Select providers offer virtual cards: Not every provider offers the virtual credit card option. There are third-party providers, however their service quality may not be the best and they may charge extra fees.
- Not 100 percent fraud preventative: Although virtual credit card numbers are typically more secure, they still fail to provide complete protection from cyber/identity theft criminals.
The importance of staying aware
Virtual cards are an innovative tool designed to reduce theft, however, as mentioned above, using virtual cards doesn’t completely ensure personal security. Therefore, it is important to continually check all credit card accounts as well as credit reports on a regular basis. This will not only help you keep track of your security, but will also encourage you to maintain a good credit score as virtual cards are not exempt from lowering your credit score.