What Is a Virtual Credit Card?
A virtual credit card is a digital extension of your physical credit card account, not a replacement. Transactions made with a virtual credit card (VCC) are reflected on your regular credit card statement. Unlike physical credit cards, a VCC exists solely in digital form, identified by a temporary, randomly generated 16-digit number known as a token. This number is swiftly created online and is typically used for single purchases via smartphones or PCs. After each transaction, the disposable number changes and expires when no longer in use, ensuring enhanced security.
Visually resembling a standard credit card, a virtual credit card displays a number string like xxx xxx xxx xxx 1234, with the “x’s” masking your actual credit card number to prevent fraud. It includes an expiration date, usually within 60 days, and a three-digit card verification number (CVV). These numbers are generated by web applications or client programs that interact with the issuer’s system and are provided by virtual card suppliers, banks, or partners of major credit card companies.
How Does a Virtual Credit Card Work?
Understanding how a virtual credit card functions is essential for maximizing its benefits. Below, we explore the key features and mechanisms of virtual credit cards in more detail.
Linked to Your Credit Card Account
When you request a virtual credit card from your issuer, they generate a unique card number for you. This number is tied to your existing credit card account, so any charges made with the virtual card will appear on your regular credit card statement.
Temporary Card Number
The primary feature of a virtual credit card is its temporary nature. You can set the card number to expire after a single transaction or a specified period, such as a month. This means that even if someone steals your virtual card number, they won’t be able to use it for long.
Spending Limit
You can set a spending limit on your virtual credit card. This feature helps you control expenses and prevent unauthorized charges.
Usage Online or Over the Phone
Virtual credit cards are designed for online shopping and phone orders. They work like a physical credit card when entering payment information on websites or providing card details over the phone.
Benefits of Using a Virtual Credit Card
Virtual credit cards offer numerous advantages that can enhance your online shopping experience and financial security. Let’s explore some of the key benefits of using a virtual credit card.
Extra Layer of Security
Virtual credit cards offer an extra layer of security by hiding your actual card number. This reduces the risk of your card information being stolen and used for fraudulent activities.
Privacy Protection
When you use a virtual credit card, your real card number and personal information remain private. This is especially important for preventing identity theft.
Controlled Spending
Setting spending limits on your virtual credit card helps you stay within budget and avoid overspending. It also minimizes the impact of any potential fraudulent charges.
Convenience and Ease of Use
Generating and using a virtual credit card is quick and easy. Many credit card issuers offer this feature through their online banking portals or mobile apps.
Compatibility with Digital Wallets
You can often add virtual credit cards to digital wallets like Google Pay or Apple Pay. This allows you to use them for contactless payments where accepted.
Virtual Credit Cards vs. Physical Credit Cards
Understanding the differences between virtual and physical credit cards can help you decide which option best suits your needs. Let’s compare their security features, convenience, and the level of control they offer.
Security
While both types of cards offer robust security features, virtual credit cards provide an extra layer of protection by hiding your actual card number. This means that even if the virtual card number is compromised, your real card number and account details remain secure.
This added layer of security reduces the risk of fraud and unauthorized transactions.
Convenience
Physical credit cards are widely accepted, and you can use them for in-person transactions at millions of locations worldwide. They are essential for daily purchases, ATM withdrawals, and situations where a physical card is required.
On the other hand, virtual credit cards are best suited for online shopping and phone orders. They provide a convenient way to make secure transactions without exposing your real card number, making them ideal for e-commerce and remote purchases.
Control
Virtual credit cards offer more control over spending and security than physical credit cards. You can set specific spending limits on virtual cards, ensuring you don’t exceed your budget.
Additionally, virtual credit cards come with customizable expiration dates, allowing you to limit the validity period and reduce the window of opportunity for fraudulent use. This level of control helps you manage your finances more effectively and enhances overall security.
Enhance Your Payment Security and Flexibility
A virtual credit card is a powerful tool for enhancing the security and privacy of your online and phone transactions.
While AvidXchange doesn’t offer virtual credit cards, accounts payable managers value our multiple payment methods, which meet various needs and preferences. By understanding what is a virtual credit card and the increasing demand for virtual payment methods, AvidXchange supports your business with secure, efficient, and flexible payment solutions.
Book a demo with us today to see how AvidXchange can streamline your accounts payable processes and provide robust payment options.
