The game between fraudsters and credit card issuers is a cat and mouse game. Just as fast as merchants put something in place to dissuade fraud with their cards, the fraudsters come up with a way to defeat them.
One of the struggles is online purchasing because the card doesn’t actually have to be present to make a purchase. All that is needed is the credit card number, expiration date, and security code from the physical card.
But what happens when that number is compromised by a merchant who is hacked and credit card information extracted? Eventually, the fraudster will attempt to use that information to buy something that will show up on your credit card. You’ll then have to notify the credit card company and get a new card issued to use. All very inconvenient.
The Virtual Card Number As Solution
One way that credit card issuers are helping with online theft of credit card information is to offer the ability to obtain a virtual credit card number. This is another whole set of number, expiration, security information that is separate from your actual card information, but is connected to it by the credit card issuer. By using this virtual card, you can hide your true credit card information from vendors (and scammers) while still allowing online purchases
While Apply Pay and Google Pay are also methods of not using your physical card, they work a little differently. Instead of transmitting credit card information, they send a token to the terminal that the merchant send to the credit card processing company to approve the transaction.
Types Of Virtual Credit Cards
There tends to be two options for virtual credit cards. One option is that the bank will provide you with a virtual credit card for use online with a particular merchant. If you have a second merchant you want to buy from, you’ll get a new number just for that merchant. Thus, if the credit card information is obtained in a breach from a particular merchant, you only have to get a new card number for that merchant. Once done the old virtual card will stop working immediately. For this type of virtual card, you won’t likely be able to choose the expiration date since it is being used one-per-merchant.
The other option is that the bank will generate a virtual card for use with all merchants. Plus you get to choose how long that card is valid for. You can choose one-time use or to keep it for all online purchases for a period of time. If your information is compromised, you can immediately get a new number, but you’ll also need to update any other merchants where you have saved that card number.
Who Issues These?
Most major banks will offer this service. If you have a major credit card, you may already have access to this free benefit. Do a search for “virtual credit card” after logging into your credit card or bank account. Some issuers who have this capability are Capital One’s ENO, Citibank card holders, and Divvy. Chase also provides that for cardholders, but you must download an app which is separate from your online account access.
Not A Substitute For Good Credit Card Practices
While virtual cards are a convenient way of hiding your real card information from online merchants, using virtual card numbers are not a substitute for good credit card practices. It is still important to review your purchases each month on your statement. Also, use alerts if possible, to determine when the card is being used. Finally, you should pull your credit report from the three reporting agencies once a year and scrutinize that for any unfamiliar items.
Virtual credit cards can be a great addition to your safety program when using credit cards. They can help reduce the inconvenience if a card number is compromised online.