With more than 2 billion consumers across the globe making online purchases, it is more important than ever to keep our bank account and credit card information secure — that’s where virtual credit cards play an essential role. Virtual cards provide an added layer of security to protect your physical credit card number from being exposed if a retailer or merchant experiences a data breach.

Visa, Mastercard, and American Express are major credit card networks offering virtual cards. In addition to more secure transactions, plenty of benefits are associated with using a virtual credit card, including spending limits and disposable card details.

What is a virtual credit card and how does it work?

A virtual credit card allows a consumer to mask the crucial information on their physical card, whether a credit or debit card, to purchase goods and services online or over the phone. This secure payment method randomly generates a 16-digit virtual account number, a unique expiration date, and a three- or four-digit Card Verification Value (CVV) code to use for transactions.

The virtual credit card is often designed for one-time use, and the cardholder can easily set spending limits. Virtual credit cards offer peace of mind and fraud protection when you’re online shopping or sharing your card details with a representative through a phone call.

If a data breach occurs at a company you’ve purchased using a virtual credit card number, your actual credit card number can remain safe from hackers. Virtual credit cards contain disposable credit card information to secure your actual financial data.

How is a virtual card different from a credit card?

Virtual cards feature a layer of security that conventional credit cards tend to lack with temporary card details. For example, it is much easier for a thief to make fraudulent purchases on a credit card because the chances of misplacing a physical card are higher than losing a virtual credit card. In addition, fraudsters can use credit card skimmers on the point of sale terminal, which effectively steals an individual’s credit card number, expiration date, and CVV code.

When a physical credit card has become compromised, a cardholder must go through the hassle of reporting the incident to their card issuer. Then the consumer has to challenge the unauthorized purchases as part of the fraud protection process. Meanwhile, the cardholder must wait several business days for their new physical card to arrive in the mail.

On the other hand, a virtual credit card reduces the likelihood of fraud thanks to the one-time use, randomly generated virtual account number. Virtual cards are mainly used for online purchases rather than at physical stores; these cards can be stored in a digital wallet like Apple Pay, where in-person transactions are securely encrypted.

Acquiring a credit card is easier than a virtual card; however, not all card providers offer the option to create a virtual credit card number. If you’re in the market for a credit card and want the virtual credit card feature, contact the card issuer to inquire if they offer a virtual account number with the product you’re considering.

What are the benefits of virtual credit cards?

A virtual credit card has the advantage of giving cardholders peace of mind through additional security; by using a virtual credit card number over the phone or at checkout when online shopping, cardholders can keep their actual credit card information safe from data breaches.

Plus, it is improbable a cardholder will misplace their virtual credit card, unlike a physical card that can fall out of a wallet or accidentally be left behind at a payment terminal. This means your credit card account can remain protected from fraudsters and hackers, reducing the chances of becoming a victim of identity theft or having to dispute fraudulent purchases.

Consumers who tend to overspend or make impulse purchases can use a virtual credit card to help curb these habits. Thanks to the option to set spending limits, virtual credit cards may empower cardholders to establish a budget and stick to it successfully.

In addition, managing budgets with virtual credit cards is especially simple regarding ongoing subscriptions since the virtual account number often has a short expiration date of several months.

This means the subscription service may send the cardholder a reminder to update their payment method once their virtual credit card expires. At this time, they can cancel the subscription altogether.

Are there drawbacks to using virtual cards?

One of the most significant limitations of virtual credit cards is that they are primarily used for online purchases and payments made over the phone rather than in-store transactions.

While a digital wallet makes it possible to use virtual credit cards at physical retailers and stores, it’s an extra step cardholders have to take, which includes owning a smart device and downloading relevant apps.

Another drawback involves receiving a refund when returning items in person that were bought online. For example, if you purchased products on a website using a virtual credit card number, then decide to return the goods at a brick-and-mortar store, the associate may ask for the card used for payment.

Since the virtual account number will not match the card details on your physical card, the company may offer store credit instead of a cash refund.

Similarly, this complication can arise when booking a hotel room or reserving a rental car. The hotel or rental company may request that you verify your payment method with the physical card. However, when the virtual credit card number doesn’t match your actual credit card, there could be issues in securing your reservation.

How do I get a virtual credit card?

With financial and personal information security at the forefront of consumers’ minds, it makes sense to prefer using virtual cards. Cardholders have to sign up for a credit card that offers a virtual account number before obtaining a virtual credit card. Several major credit card networks, including Visa, Mastercard, and American Express, let cardholders take advantage of virtual cards.

If you’re unsure if a credit issuer allows virtual account numbers to be generated, contact the issuer’s customer service to ask if their product comes with the option to produce a virtual credit card number for secure online purchases. If the credit card does feature virtual account numbers, then you should be able to generate virtual cards using the card issuer’s website or a browser extension.

What are ways to protect my financial information online?

When shopping online or paying bills over the phone, use a virtual credit card number instead of your physical card number to keep your financial information secure. A virtual account number is often generated for one-time use, which adds a layer of security to your transactions. Review your credit card activity regularly so you can easily recognize any suspicious activity and dispute unauthorized purchases with your card issuer.

If you encounter deals for products or services that appear too good to be true, there is a chance it could be a scam. Look out for fraudulent websites that attempt to copy the appearance of legitimate retailers.

To check if a site is real or not, copy and paste the shop URL into a search engine. The top results often include websites featuring online reviews or complaints made by real customers, which may offer insight into if a shop is trustworthy.

Consider using a virtual private network (VPN) software or browser extension when online to encrypt your data and mask your identity. VPNs are highly recommended for public Wi-Fi since hackers, and other unscrupulous individuals may steal your information over unsecured internet connections. A VPN lets users change their server location, so it appears they are accessing the web from a different country.

In a case where your actual credit card number is exposed through a data breach or other means, contact your card provider as soon as possible to report your card information as stolen. Your existing credit details should be rendered obsolete, and you should receive a new credit card in the mail after several business days. If your credit card statement includes unfamiliar purchases, set up a dispute for each suspect transaction.

The Consumer Financial Protection Bureau (CFPB) states cardholders are responsible for paying only up to $50 if their card is stolen and used to make lofty purchases.

Which credit card should I get?

Whether you’re applying for your first credit card or one of many, there are plenty of considerations before submitting your card application. Here are several questions to ask yourself before deciding on a credit card:

  • Do I want a credit card that provides cash back or rewards for flights, hotel stays, etc.?
  • Is my credit score high enough to be able to obtain this card?
  • Does this card offer fraud protection if my card is misplaced or stolen?
  • Will I receive any bonus when I make successful referrals?
  • Can this card generate a virtual credit card number?

How Vital Card's digital wallet works

The Vital Card App supports all major digital wallets from Apple, Google, and Samsung. The app also features a digital card with the card number and CVV card. This offers the digital security that is sought from virtual products, but on a permanent basis.

With serious perks like ID, cell phone protection, and zero liability protection, VITAL is a contender for any wallet, across both physical and digital payment terminals.

Find out more about Vital's cash rewards and how you can apply for your Vital Card.

Sources

“Number of Digital Buyers in the World From 2014-2021 (in Billions)” | Statisa, published by Daniella Coppola, October 13, 2021

“4 Things You Can Do To See Yourself in Cyber” | Cybersecurity and Infrastructure Security Alliance

Scams and Safety “Skimming” | Federal Bureau of Investigation Safety Resources

“Identity Theft” | Federal Trade Commission Consumer Advice

“Disadvantages of using a virtual credit card?” | “The Pros and Cons of Using Virtual Credit Cards,” Investing.com

“Virtual Credit Card Numbers: The Complete Guide” | Forbes Advisor Council, By Chauncey Crail, Fact-checked by Robin Saks Frankel, Updated on August 25, 2022

“Am I Responsible for Unauthorized Charges if My Credit Cards Are Lost or Stolen?” | Consumer Financial Protection Bureau, last reviewed July 11, 2017.

Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.