8 minutes

What is a virtual credit card?

A virtual credit card is a 16-digit string of numbers that provides an extra layer of protection for online shoppers and businesses. 

This allows anyone making a digital purchase to offer the necessary details (that is, a credit card number, security code, and expiration date) without providing their real information.

A virtual credit card includes three parts:

  • Credit card number
  • Card security code (CSC)
  • Date of expiration

Since the card is not physical, it can't be accidentally lost. It is just a number that lives in a digital space, ready when needed.

How they prevent fraud

Virtual credit cards expire faster than physical credit cards, often within 60 days. This is a security feature. This rapid turnover prevents fraudulent charges from being made against the same number.

Because of this, virtual credit cards are not usually used more than once.

They can also be restricted to purchases from one particular vendor, for a particular amount, or at a particular time.

Three main benefits

A virtual credit card provides security, flexibility, and ease of use.

It protects your real credit (or debit) information from being stolen by not using it within the transaction process. Some issuers go the extra mile to verify the purchaser's identity by providing a temporary password or sometimes calling the card owner's telephone number. The card can be set to work within specific parameters, and expires quickly.

A primarily digital solution, virtual credit cards can be created for online accounts and usually offer a wide range of amounts that can be loaded onto the card. Many credit card issuers offer the option of virtual credit card numbers. 

Requesting a virtual credit card number can take anywhere from 15 minutes to a few seconds, depending on the issuer. Some credit card providers are simplifying and quickening the process via mobile apps, browser extensions, and websites. With the rise of smartwatches and other devices, virtual credit cards could be used with touchless payments in physical stores.

Virtual debit and prepaid cards

Virtual debit cards can be issued to employees to ensure compliant and transparent business spending. 

Virtual debit cards differ from virtual credit cards because they are attached to a deposit account and the purchase amount is deducted from the current balance. This protects purchasers from potential debt or interest charges.

Virtual prepaid cards are also an option; it is the same as a physical prepaid card but in a virtual sense. They can be used in the same manner as other expense control choices, where a user must request more funding and provide verification for the request.

These types of virtual cards can help in automating expense processes by logging purchases immediately. They can be integrated into accounting software via APIs, and allow information to load into the software in the correct transaction category as purchases are made.

You can earn rebates

Many companies, large or small, can earn rebates by using a virtual credit card. The amount returned is tied directly to the amount spent.

Small business cards amounted to $430 billion in spending each year according to

Pushback against virtual credit cards

Some industries are pushing back against the use of virtual credit cards. This is mostly due to interchange fees being passed on to merchants or providers.

Many in the healthcare industry are being charged between two and five percent2 more to accept payment via virtual credit cards when submitting claims to insurance providers.

Connecticut recently passed state legislation3 that required that anyone attempting to make a payment with a virtual credit card to allow the provider to refuse the payment method, if the provider chose to.

How to offer virtual card numbers

You can easily offer virtual card numbers, and create a safe method for your company to complete transactions without the fear of fraud or identity theft. You can also provide your customers with peace of mind regarding their information.

Credit card numbers are unique and created with specific algorithms to ensure that they can pass validity and verification tests. By using a credit card number generator, a business can offer their customers a 16-digit string, a CSC, and an expiration date with which to make secure purchases.

The virtual credit card number does need to be attached to a real account, which requires collecting payment details in advance.

Once this is done, the number can be associated with the account and provided to the purchaser.

Should your business use a virtual credit card?

Many major credit card providers offer virtual credit card numbers to their users. The ability to offer VCC may persuade how purchasers choose their credit cards in the future, as the technology becomes more widely adopted.

Virtual cards offer an interesting and secure solution for the prevention of ecommerce fraud. They can protect businesses both by increasing protection for their customers, and ensure that business expenses are being made securely and transparently.