What is a virtual credit card?

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The past decade gave us news of banks and retailers falling prey to hacks and data breaches, putting customers’ and account holders’ personal and financial data at risk. Many online stores also keep credit card data from returning customers to allow for a smooth checkout process.

Unfortunately, this added convenience comes at a cost; it makes it easier for hackers to access your card data. One simple way to keep your information secure is a virtual credit card.

Virtual credit cards are an add-on for your physical credit card that provides security while keeping the convenience of quick, online purchases. The system behind virtual credit cards may be the most surefire way to ensure safe online payments, so read on to understand their benefits, whether they’re for you and how to obtain one.

How do virtual credit cards work?

A virtual credit card can keep your physical credit card’s information safe when shopping online or over the phone by creating a temporary card number to replace the 16 digits printed on your plastic. There are several ways thieves try to steal your personal data, but this short-lived, randomized credit card number (referred to as a “token”) is a way to keep that information safe when making purchases from a distance.

Although there are a couple of extra steps to paying with a virtual credit card, the typical experience isn’t much different to your usual online shopping:

  1. When it’s time to check out, generate your virtual card number. You may need to use your bank’s browser extension for easy access or go to your virtual credit card’s site. In either scenario, you’ll probably have to provide a username and password.
  2. Once you’ve verified your information, you’ll be able to generate a single-use token. This includes a randomized 16-digit card number and 3- or 4-digit security code.
  3. Enter the necessary information into your shopping cart’s fields and submit for payment.

The process is simple and effective. Your bank will likely determine how long the token is available before expiring, but in some cases you’ll be able to set the deadline yourself.

Should you get a virtual credit card?

If you shop online or over-the-phone you’ll benefit from the protection of a virtual credit card. It only takes one unprotected transaction to put your data and personal info at risk, so even not-so-frequent shoppers should consider a virtual credit card.

If you do none of your shopping online and don’t plan to start anytime soon, there really is no need to look into a virtual credit card. Still, there are things you can do to protect your information against scammers when paying in person. Modern credit cards use chip technology to guard your information when inserting into a credit card reader, so avoid swiping the magstripe when you can. For added convenience and security at brick and mortar stores, mobile wallets use their own form of tokenization to allow for safe payments at checkout.

Benefits of virtual cards

  • Your long-term payment and personal information is better protected. Even if a potential hacker were to obtain your data from a virtual credit card transaction, the account number won’t be linked to your identity and will likely expire before they can take advantage.
  • Your account’s risk of being compromised is low. It’s very unlikely your data will be stolen, meaning you won’t have to shut down your credit card account, be issued a new card or have to re-setup your recurring payments.
  • If your virtual card is linked to your physical credit card, transactions are traceable and will appear on your usual bank statement as normal purchases.
  • Depending on your card provider, you may be able to customize the amount of time your token stays open or specify a spending limit. Both useful features for any shared credit card accounts or if you elect to repeatedly use a token for a subscription like Netflix or Audible.
  • Even with a single-use token, returns work as normal with a virtual credit card if it’s linked to your credit card account.

Disadvantages of virtual cards

  • Virtual cards are limited in their use and for the time being can only be taken advantage of when shopping on the internet or via phone.
  • If your virtual account isn’t linked to your usual credit card account, you may run into obstacles when seeking a refund. Due to not having an account to credit back to, your options might be limited to an exchange or store credit.
  • There are potential issues if you use a virtual card to make a reservation on things like flights, rental cars or hotels. Often times, companies offering these services will request the card used to book the reservation, so it may take some extra effort at check-in, like a phone call to your bank.

How to get a virtual credit card

To sign up for a virtual credit card, you’ll need to get virtual capabilities for your credit card through your bank. There are a few major issuers who provide options for virtual credit cards; and while the purpose of each is the same, the details reveal some minor differences from provider to provider.

Capital One offers virtual credit cards through an in-house browser extension, Eno. Capital One Eno is compatible with most browsers and allows you to nickname your virtual cards to make for easy access when deciding which number to use for recurring payments, such as bills and subscription services. This feature will also be useful when you’d like to close an open virtual account. You can’t set your own spending limit through Eno, but Capital One will cap your virtual credit card’s spending with the same credit limit as your regular account. You have to be a Capital One cardholder to have Eno available to you, but any of their credit cards are eligible.

Offering another easy-to-use virtual credit card system, Citi allows cardholders to enroll online and use their website to generate a unique token whenever necessary. Citi provides cardholders with a web-based tool or a program to download in order to receive their unique tokens when needed. Within the tool, cardholders are able to set dollar limits and expiration dates on their tokens, and all Citi credit cards are eligible.

Even if you’re not a Citi or Capital One cardholder, reach out to your bank if you’re interested in a virtual credit card. There’s no harm in asking, plus, many banks work with third-party platforms to offer these features, so there may be a solution for you.