How Do Virtual Credit Cards Work?

Trisha Miller
virtual credit card

The process of using a virtual credit card is a fairly new one. The idea behind it is to keep your actual credit card information safe by creating a virtual card number that can be used online. Your card information will not be connected to the virtual credit card number, which means bad news for those looking to steal your information. However, since this is such a new concept, there are some specific stipulations and exceptions to the use of virtual credit cards that you need to know before you use one.

What is the benefit of using a virtual credit card?

Virtual credit cards protect you from credit card fraud online. Anyone who tries to steal your credit card number won’t be connected to your real credit card information. Not to mention, your virtual credit card can be associated with a specific limit. This means, you might choose to have a limit of $100 to your card and if someone were to steal that number and use up the funds, they wouldn’t have access to anything exceeding that limit.

In addition, if you’re checking your credit card activity regularly, you’ll probably see the fraudulent charge and be able to report it right away. Your bank will be likely able to investigate the virtual credit card number and not be forced to shut down your entire credit card in order to put an end to the fraud. Every bank has different processes though, so just be aware of how your bank operates when it comes to fraud.

You can create a virtual credit card number in several various ways. Banks that offer a virtual credit card service may allow you to create virtual credit card numbers at your discretion. Several institutions allow you to create virtual credit card numbers at the touch of a button directly through a mobile app, which can be used on your smartphone or computer.

In addition, if your bank does not offer a virtual credit card service, you still have options. There are many mobile apps that can now be downloaded directly to your phone that offer direct pay online or in stores. You may be able to use an app that connects your bank and credit card information, an app directly from your credit card company, or an app offered through your phone (like Google Pay or Apple Pay). Each of these services allows you to scan your phone in stores and process the payment without the vendor ever actually receiving your credit card information. When you pay online, the app will work the same way through a browser and will just mask your credit card information. Yet, this is still quite a new service, so you’ll want to make sure that wherever you’re planning on shopping allows this type of transaction.

How can I use a virtual credit card?

In most cases, your card usage will be limited to regular online purchases. Although, there are a few exceptions to this rule. For example, you may be able to use your virtual credit card number to make purchases over the phone or through a representative. If the company allows it, you may be able to call in an order or send your virtual card information over to the representative that does payment processing. Of course, this won’t work in all cases, but certain distributors will allow placing orders in this way.

What’s more, if you’d like to keep certain recurring payments safe from hackers or credit card fraudsters, you can use a virtual credit card in this way as well. You are in control of your virtual card number, which means you can set your preferred expiration date. Simply plug in the number and let the payment processor do its job.

Keep in mind though, that most virtual credit card numbers have a limit of about a year. If you’re afraid of your sensitive information being compromised for any reason, it’s not a bad idea to change out card numbers every few months anyway. It’s totally up to you how you want to do it, just make sure that you keep track of what numbers you have out there and what is being charged to that particular card number. You don’t want to look at your statement with confusion. Virtual credit card numbers are there to help make your life easier.

What can I buy with a virtual credit card?

Anything that you would normally buy with a credit card, you can buy with a virtual credit card. However, as we talked about, the single stipulations is the fact that you must make your purchase online. Your virtual credit card number will be issued to you immediately upon your request, but of course you won’t get an actual card to go with the number. So, in most cases your purchases will be limited to whatever your heart desires from the world wide web.

If you’re looking to make a single purchase online, you can even create a “disposable” virtual credit card number. This would be intended for a single use, perhaps if you’re making a single, large purchase online and you don’t want your credit card number to be compromised. All you have to do is set the expiration date of your virtual credit card number to be a few days after the payment has been processed. Just make sure that you understand the payment policies of whatever company you’re purchasing from. Sometimes payments don’t go through right away or it is the policy of the company to process on a certain date, so you’ll want to be cognizant of that and plan ahead.

There are also other services that create single use virtual credit card numbers for you. When you use their service, you simply create the number and go ahead with your purchase. When you’re finished the card number will automatically be cancelled after the process has gone through. You can also select to use the same card number multiple times, but just with a single merchant. This is an easy way to keep everything short, sweet, and perfectly safe.

Lastly, you can also gift others virtual gift cards in the form of virtual credit cards. You may have seen those pre-loadable Visa gift cards at the store. Well, these work the same way, except you don’t have to fumble around with a physical card. The card can still be used anywhere that credit cards are accepted online and there’s much less of a chance that the recipient will lose it or have it stolen. It’s also much safer than trying to send cash or checks via mail. So, if there’s someone in your family that you planned to gift cash (those really hard to buy for people) think about this as an option instead.

As you can see, virtual credit cards can be used in many ways. Just make sure that you educate yourself about online shopping policies through each vendor that you choose to purchase from. In addition, it is still imperative that you keep track of every transaction coming through your account, even if it’s done with a virtual credit card. If you follow these steps, you’ll never have to worry about your true information becoming compromised.

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