What is a virtual card?
A virtual credit card is just like an ordinary credit card, only it's not a tangible product. Nevertheless, it is connected to your physical credit card. Basically, it is a random number generated to protect your plastic credit card information when you use it for online purchases.
How does it work?
Your credit card issuer usually sets up your payment limit, expiration date, region and number of uses. Then a new virtual card number will be generated which is unique and immediately available for use with any vendor as long as the vendor has the technical capabilities to charge virtual cards.
Virtual cards are based upon existing credit card infrastructures, however instead of the issuer issuing a plastic card they have the ability to generate as many virtual cards as required meaning that they theoretically can issue a unique virtual card for each specific transaction.
Why is it convenient?
Virtual cards are a secure way to pay, since they have special controls to help prevent fraud in addition to the usual security features of a plastic credit card. Moreover, they can be limited to specific amounts and specific transactions thus rendering them obsolete if they are intercepted/stolen.
To the online merchant, virtual credit cards look just like an ordinary plastic credit card. This means that your purchases appear on your statement as usual.
Why is it safer?
When using your virtual credit card, the payment is carried out with unique information, which, even if stolen, won't be of any use for criminals, because it will expire after the selected time period. This means that virtual credit cards can be a good idea if you are buying from a new retailer for the first time or if you are not sure about the protection of your card information. Moreover, since virtual credit cards are not physical, it is almost impossible to clone them.
Virtual Cards for Corporate Clients
The virtual card industry has been growing fast not only for private, but also for corporate use. The latter can take advantage of the enhanced flexibility, security and efficiency which virtual corporate cards offer. Virtual cards for companies work just like for private individuals, a 16-digit virtual card number together with a unique CVV code and expiration date which are generated every time a company needs a virtual card. It is possible to set up many different restrictions which make virtual corporate cards even safer. This feature also makes them ideal for employee governance, since controls on the expenditure are higher.
Many companies are already using virtual cards to pay for travel and other employee expenses and the number of businesses using them to pay invoices is increasing. Many speculate that virtual credit cards can become the preferred mode of payment in the future for both private individuals and companies of any size.
- Minimum and maximum credit limit per transaction per day
- Transaction specific limits
- Valid for a specific time period
- Flexible credit structure (depending on issuer)