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Virtual Credit Cards
Get extra security when you make credit card payments online.
Credit cards give you convenient access to funds within your credit limit and quick payment for purchases, especially online transactions. But now, these cards have evolved so that you do not even need the physical card to be able to access these funds. These are called virtual credit cards.
There are a number of benefits to using a virtual credit card. In this guide, we will take you through exactly what virtual credit cards are, how they work and how to decide whether they are right for you.
What is a virtual credit card?
Virtual credit cards (VCC) works similarly to conventional credit cards, but they are not physically issued by the credit card provider. Also known as a ‘controlled payment number’, VCCs are randomly generated 16-digit numbers associated with your actual credit card. The temporary numbers can typically only be used once and may expire within validity period if not used.
This is usually a complimentary service offered by the respective card issuer to customers who want to perform an online payment through their credit cards, but wishes to opt for an extra layer of security to avoid online credit card fraud.
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How do virtual credit cards work?
The unique virtual credit card number is linked and allows you to transact on your main credit card account. However, it is designed to provide ‘mask’ your actual credit card number, making it more challenging for malicious online merchants or criminals to commit fraud.
You can take extra precautions to further protect your online transaction, such as:
- Set an expiry for the VCC numbers anywhere from a day up to a year from its creation date
- Set a spending limit for the VCC number
- Choose to lock or delete a particular VCC number. For example, you can choose if you wish for the randomly generated VCC numbers to be one-use only or available for multiple uses.
What are the benefits of a virtual credit card?
Using a virtual credit card has a number of advantages, including the following:
- Secure online shopping. Randomly generated card number puts a degree of separation between online vendors and your actual credit card number, providing extra security for your transactions.
- Free service. The generation of VCC numbers is typically a free service provided by the respective credit card providers for their customers.
- Single- or multi-use. There are single- and multi-use virtual credit cards numbers available to suit your preference.
- Limited to one vendor. If you stored your real credit card number at a site that got hacked, then the card could get bogus charges from another vendor. With virtual account numbers, the charges are supposed to be restricted to one vendor.
- Hassle-free replacement. In the case of a data breach, there’s no need for you to request a new physical card. Especially for single-use VCC numbers, you don’t have to worry about it being maliciously reused and getting charged for fraudulent transactions. For multi-use VCC numbers, you can simply generate another unique number to replace it.
- Peace of mind. One of the key benefits of VCC numbers is that the added security might help you attain a little more peace of mind when you make purchases online or on the phone.
What are the drawbacks to a virtual credit card?
Keep in mind virtual credit cards are not foolproof and does have its downsides. Here are some points to consider before signing up:
- Limited to online transactions. Virtual credit card numbers cannot be used in a situation where you’d swipe a physical card.
- Not suitable for all types of online purchases. Do not use virtual credit cards in scenarios where you’d need to physically collect an item as the merchant will most likely need to tally the virtual account number to the number on your card. For example, when you’re picking up movie tickets or renting a car.
- Not ideal for recurring payments. Virtual credit card numbers may cause more hassle than provide convenience as the generated number may expire before the next payment. Also, with ever-changing numbers, you might forget to generate a new number and keep track of everything.
- Limited availability. The range of local providers which offer virtual credit cards is extremely limited at the time of writing (February 2019).
- Returns may be problematic. Returning items you ordered online to a physical store could pose a challenge with virtual credit cards as some merchants may need to match the card number you used for the purchase with your physical card to process the refund. If the VCC number you’ve used has expired, you may have to accept a store gift card instead of getting your money back on your credit card.
What virtual credit cards are available in Singapore?
At the time of writing (February 2019), personal virtual credit card offerings from local banks and online providers are extremely limited.
If you’re a business owner, DBS is currently offering a commercial card named DBS Virtual Card that can help you consolidate and manage your employees’ corporate expenses without the hassle of issuing separate cards to them. The DBS Virtual Card is basically a centralised online travel account which you can oversee and control employees’ usage of the company’s credit card to prevent misuse. With this card, you may set amount limits and transaction caps, restrict how regularly and where the card can be used and more.
On top of the convenience and control, the DBS Virtual Card also provide additional perks, such as:
- Complimentary travel accident insurance for employees of up to S$1 million
- Complimentary insurance against employee misuse
- For companies holding two or more DBS Virtual Cards: Complimentary annual coverage of employee misuse up to US$25,000 per cardholder and US$1.65 million per company
Aside from DBS, WEX Inc is another provider offering virtual credit card services for companies. Another alternative to personal VCC would be dynamic security codes, which are randomly generated one-use only CSC/CVC/CVV.
Frequently asked questions about virtual credit cards
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