- A virtual credit card replaces your regular credit card number when making a purchase.
- Using a virtual credit card can protect your financial information from fraudsters.
- A downside for merchants is that virtual credit cards can make it harder to identify customers.
What is a virtual credit card number?
A virtual credit card number is a unique but temporary digital card number linked to your primary credit card account.
How virtual credit card numbers work
Virtual credit cards offer a modern solution for secure online shopping. They generate a unique card number for each transaction or vendor. These temporary numbers are linked to your main credit card account but keep your actual card details hidden from merchants. This digital tool protects against fraud and unauthorized charges, as the virtual card can be easily frozen or closed without affecting your primary account.
Virtual credit card numbers are widely accepted by online retailers — and even in-store, often — and can be used to manage subscriptions, one-time purchases, or any transaction where you want to limit your exposure to potential fraud.
Differences between physical and virtual credit cards
A virtual credit card is a digital version of a physical credit card with a different credit card number. A physical credit card is one that you can hold in your hand, while a virtual credit card doesn't exist in physical form. However, they function in many of the same ways.
Common providers of virtual credit card numbers
The largest credit card issuers that offer virtual credit card numbers are American Express, Citi, and Capital One.
Benefits of using a virtual credit card number
There are a variety of benefits to using a virtual credit card number.
Enhanced security for online shopping
Virtual credit card numbers add an extra layer of security to your online purchases by ensuring your actual card details are never exposed. This significantly reduces the risk of fraud and data breaches.
Additionally, virtual credit card numbers make online transactions seamless and quick, as you can generate a new card number instantly without waiting for a physical card to be issued.
Control over spending limits and expiration dates
You can set spending limits and expiration dates for virtual credit cards, offering greater control over your finances and budget.
Privacy protection for subscription services
With so many subscription services available today, using a virtual credit card number can be a wise choice for better managing any subscriptions you sign up for. Not only will it make the transaction more secure, but because virtual card numbers typically expire within a particular timeframe, you won't have to worry about accidentally continuing to pay for a subscription service you don't want or need.
How to set up and use a virtual credit card number
Using a virtual credit card starts with choosing a provider, typically your existing credit card issuer.
When selecting a virtual credit card provider, consider factors like ease of use, customization options, compatibility with your preferred merchants, and customer support.
Review any associated fees, such as transaction fees or limits on the number of virtual cards you can create, to find an option that matches your financial habits.
Steps for setting up a virtual credit card with your bank
If your credit card issuer offers a virtual credit card number, there will be an option to enroll in this benefit.
After enrolling, you can generate a virtual card through the issuer's website or app, customize its limits, and use the generated number for online purchases. Some issuers also allow their virtual card numbers to be added to virtual wallets, allowing you to pay for in-store purchases, too.
It's important to keep track of any active virtual cards, especially if you set them up for recurring payments, to ensure you don't forget about these transactions.
Troubleshooting common issues
One of the more common issues with virtual credit card numbers is having a transaction declined due to an expired number, mismatched billing info, or a limit that's been reached. Confirming these details is worthwhile; if the issue persists, connect with your card issuer for help.
Security and privacy considerations
Virtual credit card numbers add an extra layer of protection when you're shopping online, making it safer to share payment details.
Key security features of virtual credit cards
Virtual cards and card numbers help reduce the risk of fraud in various ways. Some let you set spending limits or restrict where they can be used, which protects against unwanted charges if your card information is stolen. They're also easily disabled, which can be helpful in the case of suspicious activity.
Managing fraud and unauthorized charges
Using virtual credit card numbers allows you to avoid storing your primary card information in multiple places online, reducing the chance of your data being misused. Because virtual credit card numbers are temporary — they have an expiration date — they offer better protection against unauthorized charges.
If you notice fraud on a virtual credit card, it's easier to freeze it without affecting your primary account. You can also opt into real-time alerts with many card issuers, which will help you stop unauthorized charges more quickly. Understanding the terms and conditions, including how to report and dispute fraudulent transactions, is also crucial for effective use.
Limitations and drawbacks of virtual credit card numbers
While virtual credit card numbers can protect you against fraud, there are some challenges you might face when using a virtual card.
Where virtual cards may not be accepted
Only some businesses accept virtual credit card numbers. Smaller merchants that only do in-person transactions could struggle to process them since they don't have a physical card to swipe. That's especially true if the merchant doesn't accept mobile wallet payments.
Challenges with recurring payments and refunds
When you're using virtual credit card numbers for recurring payments like subscriptions, issues can arise because the payments are often linked to your original card number. This can be a problem if the virtual card number expires or the limit is reached. Additionally, refunds can sometimes be more difficult to process if the virtual card numbers have expired or don't match the original payment method on record.
Expiration dates and card management
Virtual cards can be harder to manage than physical cards because they often have shorter expiration dates. If you have more than one virtual card, keeping track of each card's validity can be more challenging. Having a system in place to help you manage multiple cards — whether physical or virtual — is the key to avoiding issues.
FAQs about virtual credit cards
You may be able to use a virtual credit card for in-store purchases. Virtual cards are primarily designed for online use, but some providers might offer options for in-store purchases through mobile wallets.
You can usually cancel or delete a virtual credit card through your credit card issuer's website or app, instantly stopping any further transactions with that number.
If you need to return an item purchased with a virtual credit card, the process should be the same as with a physical card, with refunds issued to your virtual card number and then credited to your main account.
Yes, transactions made with a virtual credit card typically earn rewards just like those made with your physical card, depending on your card issuer's policies.
