Virtual Credit Cards
What is a Virtual Credit Card
Virtual Credit Cards have been in vogue for several years abroad, but here in India it is a fairly new concept. It is also known as a substitute credit card. A virtual Credit Card allows the user to generate a new number for each online transaction. Doing so makes it much more difficult for anyone to steal the number and use it without your permission, simply because each newly generated number is intended for a single use only.
It must be mentioned that virtual Credit Cards are not at all Plastic Cards, as the regular credit card looks.It is nothing more than a combination of numbers and a credit limit tied down to that number. This is generated by the offering bank, and is linked to your existing credit card. They are also called as one-time-use cards, since most of the time such cards are sought by people and obtained from the bank, in order to conduct some purchase transaction online. Once used, this card becomes null & void.
To obtain a virtual card, one must first submit an application to the bank that offers this type of card. If your credit card application is accepted, you are assigned a credit limit and given instructions to download software that allows you to generate the new number for each purchase. The software automatically ties the purchase back to your main account or to your existing credit card – as the case may be, so that all of your purchases still appear on one easy-to-read monthly statement.
Unique Advantages of Virtual Credit Card
The single greatest advantage to virtual cards is the level of consumer protection they offer. With most programs today, each new number is good for one use only. That means that even if someone intercepts the number at some point in the future, they can do nothing with it. In addition, the card number cannot be used to access other key financial data about you, which in turn decreases the potential for identity theft.
Despite this level of protection and the fact that the best credit card companies and associated banks offer virtual credit cards, it has not attracted much attention in India. Part of the reason may be that some users consider it redundant, since most credit cards come with a limit on liability anyway. Another possible reason is simply the need for instant gratification that many consumers want with their purchases. Taking even the few seconds necessary to download software and generate a new number for an online purchase is probably found very cumbersome by most of the people.
However, the continued development of more sophisticated methods of stealing credit information, along with the growing popularity of online shopping, would eventually lead to more people reaching out to obtain Virtual Credit Cards. Fortunately, blog postings by consumers who already use these types of cards are widely available online, making it easier for potential clients to read and evaluate Virtual Credit Cards and their benefits.
In fact, you may find that your current Credit Card / Debit Card provider already offers a virtual solution, through your bank. Since you already have an account established with the banking service provider, it would be possible to just obtain the Virtual Credit Card option linked to your existing banking account or to your existing credit card. When this is the case, you can download the necessary software to your computer, and begin to use your virtual account immediately.
Limitation of a Virtual Credit Card
The single biggest limitation is that, unlike your regular Credit Card, the Virtual Credit Card cannot be put into your wallet and walk out for shopping.
In fact, we should not be calling it as a limitation at all, since the purpose of a Virtual Credit Card itself is for a Secure, One Time, Online Transaction. It is similar to your Bus ticket or train ticket, in the sense that your journey is completed the ticket has served its purpose.