A virtual credit card (also known as a virtual card) is a temporary digital card number that is used for online payments. If you’ve ever felt concerned about entering your credit card information into a website for fear that it might be stolen by hackers, a virtual credit card might be an attractive option.
Virtual credit cards are generally not standalone lines of credit—meaning, they’re usually generated in connection to an existing credit account. For example, Bank of America offers a version of virtual credit cards called ShopSafe. Through their system, rather than entering your physical card’s information into a website when making an online transaction, you’re redirected to your online account where a 16-digit virtual number and security code are instantly generated and used to authorize the transaction. Online retailers and services never even have access to the information itself, and the next time you use the feature, an entirely new number is generated in order to help avoid hacking or fraud.
Virtual credit cards have surged in popularity in recent years, thanks largely to the rise in online shopping alongside the rise in cyberattacks and identity theft. Here’s everything you should know about virtual cards and whether having one is right for you.
Virtual credit cards are usually accessed through a request to one’s bank or creditor. This request is usually made through an online account. Once someone has made their request, the bank or card issuer will generate a random card number, expiration date, and security code that’s connected to their existing account.
In some cases, this virtual card information is used for all online transactions. In other cases, a new, randomly generated set of numbers is used for every unique transaction—an approach that obviously offers even more security benefits.
Online retailers where a customer could use the virtual card online aren’t able to see the customer’s account information (or even the temporary card number), but the transaction will still show up on the customer’s personal bank statements as if it was used by their normal, physical card, helping avoid confusion about transactions and where they originated.
The primary benefit of a virtual credit card is related to security. As more and more online retailers are experiencing major data breaches resulting in thousands or even millions of lost and stolen financial profiles, shoppers are rightfully wary of entering their card information into websites online where it can be stored and eventually stolen.
A virtual credit card offers an alternative, letting them easily and conveniently make online transactions without having to enter their physical card information into a website they don’t fully trust. In cases where virtual cards are generated for a single use and then replaced with another randomly generated number for each purchase, even a hacker who managed to access the information wouldn’t be able to use it for anything.
Even those who have credit cards with fraud protection may want to also consider using a virtual card. Even the most robust fraud protection services require cardholders to go through a dispute process that includes the need to cancel their card and wait until a new one is sent before being able to make purchases again.
There are some potential complications with using virtual credit cards. One example is in the case of a returned item. Many retailers require refunds to be placed back on the same card used to make the purchase. If a customer made the purchase on a virtual credit card number generated at the moment of the purchase, that number no longer exists. The customer may have to opt for store credit for their return.
Another example is in cases where cards are used to make reservations or purchases, and then must be used later for identity or account verification. Think of booking a hotel: many require guests checking in to present the same card they used to book the room. With a virtual credit card, this would be impossible.
These are both relatively minor setbacks, but they are worth considering when using a virtual card for online transactions. There are definitely use cases where it makes more sense than others.
The best place to start for accessing a virtual credit card is your existing bank or financial institution. Citi, Bank of America, and Capital One all offer virtual card services, though in some cases they’re only available for certain cards. The best way to find out whether one can access a virtual credit card is by contacting one’s bank directly through their online account. Some even have a dedicated section of their account where they can request a virtual credit card to be set up automatically, without having to speak to a representative.
Each financial institution has a slightly different mechanism and branding for their virtual credit card services. Bank of America’s is called ShopSafe, Capital One has a service called Eno. Citi simply refers to their offerings as Virtual Account Numbers. But in essence, they’re all offering the same service: temporary, virtual card information used to securely make transactions online.
The entire ethos behind virtual credit cards is that they’re safer than entering your physical, permanent card information into an online retailer’s checkout page where it could be exposed to hackers or fraudsters. In that way, virtual cards are significantly safer for online transactions than physical card information. That said, they’re not infallible. While one-use virtual cards are more secure, those that are generated for multiple uses could technically be accessed and used by hackers for other purchases.
So, what separates virtual credit cards from payment apps like Venmo or Apple Pay? They both serve a similar purpose. When you make a transaction through one of these apps, the retailer receives the transaction via a single use digital ‘token’ rather than receiving one’s credit card information.
However, many online retailers still don’t accept payment processing apps—they’re more commonly used at brick-and-mortar stores and physical retailers. That said, they’re starting to be accepted more frequently online, but until they’re more widely accepted, virtual credit cards may remain the most accessible and secure option for shopping online.
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