Virtual credit cards (VCC) are a new means of protection against fraud when you shop online from a PC, tablet, mobile, or any other smart device that stores sensitive data. Providing dynamic information to online vendors, vertical credit cards are nothing more than a digital substitute for a physical credit card.
Virtual credit cards respond to an actual demand to combat card-not-present (CNP) fraud. CNP fraud takes place when you provide the actual information of the physical credit card online. This can be stored and then used by fraudsters to access your real financial information.
VCC numbers are randomly generated by a computer algorithm, which is proprietary to each issuer. The VCC will have an expiry date and security code. Users can choose an amount to allocate to the card or create a “burner” VCC (also known as a single-use card), which will expire immediately after the first payment. With many online cards, users can set spend limits, pause, and close cards without any risk or loss.
If you wish, you can limit the use of your VCC to a single merchant. For subscriptions, however, things get trickier if the service you use generates a different number for each transaction. You will have to renew your virtual credit card details for each payment. Other VCC services allow you to set an expiry date for recurring payments.
As their name implies, virtual credit cards can only be used for online purchases. Using such a dynamic payment option eliminates the need to insert the actual number of your physical credit card, decreasing the chances that hackers misuse your financial data. Even if hackers gain access to the virtual credit card number, the information will be useless for them, since these are dynamic and function like an EMV smart card, generating a token for each use.
Many major banks offer VCCs, and several reputable online services offer online cards too. Since retailers store physical credit card numbers and are always at risk of being hacked and used for fraud and even identity theft, using virtual credit cards makes sense to protect your data and identity.
If your bank does not offer VCCs, you can opt for a digital service like Rewire and get a virtual Mastercard for your online shopping convenience.