12/1/2022
Physical credit or debit cards may have a virtual version available from the bank or the entity in charge of issuing them.
In this digital era, electronic payments are becoming more and more common, having greater diffusion among stores and businesses. If you want to know how virtual credit cards work and their characteristics, follow us.
What is a virtual card
A virtual credit card (VCC) represents a disposable option of a physical plastic issued by a financial institution.
This functionality means that it is used for online purchases and has other security provisions. For this reason, it is a product that is used to provide convenience and avoid certain problems associated with the physical versions.
The main difference of a VCC lies in the way it shares the information it contains. In a physical credit card, the data it has integrated does not suffer alterations during the life cycle of the plastic, being vulnerable to theft by hackers or other cybercriminals.
In contrast, a virtual card provides dynamic information, changing the verification data every time you make a purchase.
How virtual cards work
Most online stores need to store their customers' personal and payment information for various purposes. As part of a more streamlined and efficient service, such records prevent you from having to enter your data over and over again.
The problem is that hackers can get hold of this information, putting you at risk for fraud or identity theft.
Unlike regular credit cards, virtual cards make use of an application to generate a new token or number for each transaction you make.
This momentary identifier is transmitted between the bank and the merchant to approve the transaction. The advantage over the fixed token that uses the information printed on the plastic is that digital tokens can only be used once, reducing the risk of theft.
Where to get a virtual credit card
As a general rule, the most important commercial banks, like Bank of America or Citibank, have virtual cards available at no cost to their cardholders. When you are not sure if your issuer offers this service, we suggest you ask them to find out.
These products are more customizable, allowing you to set spending limits, Bill Pay automation or expiration dates.
In case your bank does not offer a digital plastic, you can use an outsourced service that works with the physical card you have.
Advantages of using a virtual card
Virtual cards can be a secure, easy-to-obtain and hassle-free alternative for making purchases. We remind you that these digital plastics can only be used through a call or in ecommerce businesses around the world.
In addition to being difficult for hackers to track, they are very useful due to:
- Virtual cards are valid for a period of time imposed by the sponsored bank or plastic issuer.
- Those who use these financial instruments have a minimum and maximum limit per transaction each day.
- In the case of a remaining balance in the account, this money will be returned to the customer's original credit card when the virtual one expires.
- These digital cards are only available to holders of a physical credit card, so there is no possibility of having an additional plastic credited to another person.
- Customers who have these banking products can make a transaction using the entire available balance or only a portion of it.
- Since virtual cards are not composed of tangible elements, it is very difficult to try to clone them. This feature makes them much more secure for online transactions.
Differences with payment apps
Although they work in a similar way, virtual cards should not be confused with payment apps such as Google Pay, Apple Pay, PayPal, Venmo or Zelle, among others, including the bank apps like the Chase Mobile App.
The basic difference lies in whether the plastic number is used when paying. With an app, the merchant receives a limited-use identifier to validate the transaction.
Moreover, contexts are also different for these two technologies. While digital cards are used more for online and phone purchases, payment apps are becoming more accepted in traditional merchants to give you more convenience and to compete with other businesses.
If you are concerned about taking steps to prevent the theft of your regular credit card information, a virtual card is a good option. In the Busconómico comparator you can find financial products like these to diversify your personal finances.
Español: Qué son las tarjetas de crédito virtuales