How virtual credit cards work

When you make a purchase from a reliable merchant that you and many others have been using for years, there isn’t a reason for you to worry about putting in your credit card information to complete the payment processing. However, if you come across a fairly newer and smaller eCommerce site that you want to make a transaction with, you may have second thoughts about giving them such sensitive information.

When this happens, there are alternatives to making a secure payment you can go for. One of these methods is through a virtual credit card.

What is a virtual credit card?

A virtual credit card is basically a credit card number given to you by one of the online payment services companies. This allows you to make an online credit card payment without the need to put in your real credit card information that hackers can trace back to you and your bank account. It also creates certain limitations for this virtual card such as locking it to a single merchant. You can also customize the spending limit you have for the card as well as the expiration date. All you have to do is to log in to your issuers’ account to get the new information that you will need to make a new transaction.

To prevent fraudulent purchases, you can even have the card’s issuer lock or even delete the virtual account number. Once this happens, you can easily create a new virtual credit card number to make other purchases.

How do virtual credit cards work?

Virtual credit cards work pretty much the same as your normal chip credit card does. The only thing is that they are only useable over the phone or online. You also won’t be using a single card number for every payment transaction that you make. Every time you wish to make a purchase using your virtual card, the issuer’s software or app generates a new random number or “token” that you will be able to use for the payment processing. This number is linked to your original chip credit card and the purchase amount will show up as a regular billing on your monthly statement.

Another thing is that there are some merchants that will require you to show your original credit card once the payment processing is done. If this happens, then you will really not be able to go through with the transaction using your virtual card since it is non-physical. A few downsides to virtual credit cards are when you purchase subscriptions. Since virtual credit cards have short expiration dates, there may be problems with recurring payments that you sign up for.

One of the great things about having a virtual credit card to use instead of your normal chip card is that it eliminates any chances of it being cloned or getting a data breach. Since it provides you with a new number for every online credit card payment transaction, it is virtually impossible for hackers to trace anything back to your bank account information. This allows you to keep your main credit card open and functioning without the fear of having it breached.