Virtual credit cards are digital versions of physical credit cards. They generate a unique credit card number that you can use instead of your physical card number, avoiding the merchant from storing your credit card data and making your financial data more safe.
With security breaches in the news, using a virtual card adds an extra degree of security. Several major credit card issuers provide virtual cards, although there are several outliers. Virtual credit cards provide more than just security. A virtual credit card allows you to utilise a newly created account before the physical card arrives, allowing you to collect rewards right away or make progress towards a welcome bonus.
Are virtual cards safer than physical cards?
Virtual cards provide an additional layer of security over physical cards by safeguarding your real credit card information. This makes them safer than physical cards in various aspects:
- Virtual credit cards might have spending caps and be restricted to specific merchants. They can also be configured for single use, deactivating automatically after the very first transaction. These restrictions provide extra fraud protection compared to a standard credit card.
- Unlike conventional credit cards, virtual cards cannot be stolen or misplaced. If you carry a physical credit card and it is stolen, you may be susceptible to scam. Virtual cards are stored in your digital wallet, keeping you secure from fraud.
- Virtual credit cards must adhere to the Payment Card Industry Data Security Standard (PCI DSS), which includes standards and guidelines aimed at safeguarding credit and debit transactions and preventing the exploitation of cardholder data.
Benefits and drawbacks
Virtual credit cards have many benefits, but there are a few drawbacks. Here are some of the advantages and disadvantages of virtual cards.
Pros:
Enhanced security: Using virtual cards to make online transactions safeguards your actual credit card information and adds an extra layer of security over physical credit cards.
Flexibility: Without changing your actual credit card, you can choose which vendors you want to use the card with, set up expiration dates, and create specific spending limitations.
Convenience: Virtual credit cards are generated instantly and can be utilised immediately for online purchases and contactless payments.
Cons:
Not always able to utilise them in-store: Not every retailer accepts contactless methods like Apple Pay or Google Pay. When it comes to in-store stores, you can be constrained, even though virtual cards are perfect for internet buying.
Cons:
Refunds could be difficult: Every retailer has different regulations, and some could only give refunds for the original payment method. If you utilised a virtual credit card number that is no longer active, this can be an issue. Instead, you may get a cheque, a gift card or store credit in this situation.
Unsuitable for reservations: It may be challenging to match your payment method at check-in if you use a virtual card to make a hotel reservation. Since hotels usually need a physical card when you check in, using a virtual card can need further verification, such as getting in touch with your bank.
