Everyone is familiar with the concept of credit and debit cards. Most people today have used a card to make an online purchase at least once, but usually with an ever-lingering feeling of unease. Exposing your credit card number and personal information is always risky, since data breaches have become unsettlingly common. Using a proxy payment method such as virtual cards brings a lot more security to the whole process.
To those who are unfamiliar with the concept, here is what virtual cards are in a nutshell.
Virtual card represents a credit card number that is connected to your main card, but without exposing the main card number and data. Basically, it works as a proxy virtual account number to your charging account. It is as secure when it comes to anonymity as are the prepaid cards.
If a breach happens, you can terminate your virtual credit card number instantly, and without any damage to your main account. This is why all major credit cards and many reputable sellers support this type of payment method.
In this article we are going to explain how virtual cards work and what benefits they offer to users, as well as merchants. If you are an owner of an e-commerce business, make sure to read the following lines and enable this payment method. It is safe, fast and reassuring to the customers.
What do virtual cards offer?
Although this type of payment doesn’t bring any new mechanics to the game, it does bring a lot of benefits to the buyers.
Tying the virtual card number to a selected number of merchants.
Owners of v-cards can choose to which merchants the card number is going to be connected to. For example, you can limit a particular card number to one or several e-commerces, so that they are only valid for purchases from those stores. If anyone tries to make a transaction anywhere else, it will fail.
Of course, you don’t have to do this – you can keep your v-card just as a proxy for all your online purchasing and transactions, if you don’t want to complicate things. Either way, the vendor of the card will ask you to choose one of those two options, or you can request it yourself.
Time limit can be set on the card
You can set an expiration date on your v-card, if you have a particular time frame in mind. For example, if you’re going on vacation, you might want to set a virtual credit card number for the duration of your stay. This is particularly useful in countries where contactless mobile payment is present.
This feature can also be very beneficial if you are concerned about the safety and hacking – changing this number frequently, while keeping the main card undisturbed, is a very good method of avoiding data breaches and losing funds.
There is an option of setting a spending limit
If you are afraid your shopping spree can get a little bit out of hand, there is an option of setting spending limits for selected merchants, or overall. A beautiful thing about this prop is that payment limits can be set on both ends – high and low. This ensures that there is no overspending, but also avoids underpaying. The amount can be set for each transaction, and can also be done periodically, which is a great advantage when it comes to recurring invoices.
Detailed transaction data
Other electronic payment methods, such as wire transfer and ACH offer a very limited amount of transaction details. These methods offer between 80- and 140-character spaces for this purpose, which might be insufficient for a detailed report.
V-cards don’t have such limitations. What’s more, many v-card vendors offer customized fields for details about buyers, sellers, invoice numbers, various payment info and similar. These options are offered when you register for the virtual credit card number and you can choose optimal options for your needs.
High security from fraud and data breaches
Online payment methods are ripe with phishing scams, identity theft and fraud. Data breaches can expose significant personal and bank account information that can take days or weeks to mitigate. This is rarely an issue with big companies and merchants, but small and medium enterprises might not have a budget large enough to invest in fraud detection or customized security mechanisms.
This is where all the aforementioned benefits of v-cards prove their worth. Even if there is a malicious attempt to drain funds from a card, the spending limits set in advance will mitigate the consequences. Furthermore, if the virtual credit card number is time-limited, after the expiration it is worth nothing to the thief.
The bottom line is, even if the breach is successful and you lose some of the money, no one can get your real credit card number and information, or your personal data.
The virtual card account can be closed at any time
Probably the most important factor when deciding which online payment method to use. Although today we can halt credit card transactions online or by making a phone call to the bank, the process in no less tedious. Cancelling a credit card means that a new credit card number has to be issued, which leads to a cascading chain of problems.
Every merchant, freelancer or company which was paid through that account now has to get a new one, new physical cards need to be issued and the whole process can become a massive headache. On the other hand, if the v-card needs to be cancelled for any reason, you can keep your peace of mind knowing that the original account is intact.
The best thing about electronic payments is that there is no paper, envelopes, checks that can be costly, printers and man hours for sorting, sending and filing the payments. To be honest, most credit cards can, combined with a good automation software, manage recurring payments.
The upside to v-cards is that the bank account and the associated credit card numbers are masked. In this day and age when many business owners depend on autsourcing and freelancers, privacy and mindfulness are always a priority. Additionally, depending on the v-card vendor and the type of the card, maintenance fees are anywhere between competitive and non-existent.
You can choose between single-use and long-term use cards
To add an extra layer of security, vendors who offer virtual credit cards present you with two choices. One type is single-use, the other is time-limited.
The first type practically expires as soon as the transaction is successful. The other type of card is issued with an expiration date, usually a year or two years. This type is more convenient for business owners who have to make automated payments, or anyone else who needs a proxy for their credit card. After the time is up, the virtual credit card number simply perishes.
You can use them for paying online anywhere
Every vendor or company which accepts credit cards as an online payment method, accepts v-cards as well. This goes without saying for e-commerce businesses, but it is also important to note that any type of online payment associated with credit cards supports this method. This is what the v-cards are essentially made for.
However, virtual credit cards are not a good payment method if you need to return the goods. Simply put, the credit card number used at the brick-and-mortar store needs to be the same as the number of the card you use when you want to return the goods. If you use one card when buying, and another one when returning, there will be no match.
Another downside is that v-cards can’t be used for reservation purposes, for the similar reason as stated above. Still, there are plenty other ways to use v-cards, and advantages are much greater than drawbacks.
Whichever financial services you are using for your online shopping, security and anonymity should always be your priority. An average consumer doesn’t have enough knowledge, let alone resources to combat ever-evolving phishing schemes and hacks. This is why using simple, yet effective solutions such as virtual credit cards can save one a lot of headache over losses that could easily be avoided.
Nina Simons is a digital nomad passionate about a healthy lifestyle and creative DIY projects. @NinArtSimons