Virtual credit cards are digital cards that are available online and don’t have a physical form. Customers can use them to carry out online transactions. It’s similar to your conventional credit or debit cards with a card number, CVV, and validity dates. However, all these details are only available online. Here are some pros and cons of owning a virtual credit card.
Virtual Credit Card
Most major credit card issuers offer virtual credit cards (VCC) to ease customer transactions and improve security. While it serves as a virtual extension for a physical credit card, customers can only use it for online transactions.
Features and advantages of VCC
- Offers improved security
Virtual credit cards come with a one-time usage option. The card number generated is valid for a specific period ranging from 24 hours to 48 hours. As the card is available only online, thus minimising the chances of misuse or theft.
In some cases, a cardholder can cancel the card if they do not require it.
- It comes with a transactional limit
Similar to physical credit cards, VCCs also come with a set credit limit. Users can transact multiple times within this limit. Its credit limit is identical to that of the primary card.
- Immediate availability
As card issuers provide VCCs online, customers can access them immediately for required transactions.
- Instant online application and blocking facility
Cardholders can apply online and block their VCC instantly online in case of any suspected fraudulent activities.
- CVV remains the same throughout
The CVV number of a virtual credit remains the same if the card is active irrespective of the number of transactions a customer makes. It only changes when a customer cancels it and avails a new card instead.
- Issued to primary customer
A VCC is issued only to the primary cardholder and not to an add-on holder of the primary card.
How does a virtual credit card work?
A virtual credit card is a digital or online version of a physical credit card. It is a unique credit card number that can be used to make online purchases without revealing the original credit card details. Virtual credit cards work in the same way as physical credit cards but with added security features. When you make a purchase using a virtual credit card, a one-time code is generated, which is usually valid for a limited time frame. This ensures that even if the code is compromised, it cannot be used for fraudulent transactions after the expiry time. Virtual credit cards are a convenient and safer option for online transactions as they provide an extra layer of protection to credit card users.
What are the limitations of virtual credit cards?
While virtual credit cards offer added security and convenience for online transactions, there are some limitations to be aware of. Here are some of the limitations of virtual credit cards:
- Limited use: Virtual credit cards can only be used for online transactions and not for in-person purchases.
- Merchant acceptance: Not all merchants accept virtual credit cards, so your options for using them can be limited.
- Restrictions on refunds: Some merchants may not be able to process refunds directly to virtual credit cards, which can be inconvenient for users.
- Time-limited usage: Virtual credit cards usually have an expiry time, which can limit their usefulness for longer-term or recurring transactions.
- Dependence on technology: As with any digital product, virtual credit cards may be subject to technological glitches, which can cause issues for users.
How to use a virtual credit card
A VCC is available for online transactions only and does not extend to physical swipes. Users need to follow the below-mentioned steps to complete a transaction when using it to make purchases or payments.
- Input the card number
- Enter the validity required
- Verify with OTP sent to the registered mobile number
- Complete transaction
Is it safe to use a virtual credit card?
Yes, virtual credit cards are generally considered to be safe to use. They offer an extra layer of protection to credit card users by generating a unique, one-time-use code for each transaction. This code cannot be used for any other transactions, reducing the risk of fraudulent activity. Additionally, virtual credit cards can help safeguard against identity theft, as they do not reveal the original credit card details. While there is always a degree of risk involved with online transactions, using a virtual credit card can help mitigate that risk and provide peace of mind to credit card users.
Should you apply for a VCC?
Given its features and benefits, a VCC ensures additional security against a physical credit card. Other benefits include the following.
- The unused credit limit is transferred on expiry
If the VCC expires, the remaining credit limit is transferred to the primary card.
- Available at zero cost/ fees
Currently, financial institutions provide these cards free of cost. You aren’t required to pay any fees or charges while availing of it.
- National and international transactions possible
The utility of VCCs extends to both national and international transactions, thus enabling cardholders to make online purchases conveniently.
Things to consider before applying for a virtual credit card
Users must, however, confirm their decision for VCC applications after considering the following pointers.
- The existence of a primary credit card is essential to issue a VCC. Individuals must, therefore, obtain a physical card to be able to avail and use it.
- VCC’s utility at physical stores is limited, which means customers cannot use the card to make any purchases at shopping malls or outlets.
- Also, since a VCC’s usage is limited to online transactions, users cannot make cash withdrawals through it.
We’d recommend weighing the pros and cons of a VCC before applying for one. If its limitations outweigh its benefits, users can go for options like Bajaj Finserv RBL Bank Credit Card that come with robust security features like zero-fraud liability and in-hand security.
Other attractive features of the card include attractive annual savings, interest-free cash withdrawals for up to 50 days, repayment in easy EMIs, and a personal loan against the unused credit limit.
Certainly, virtual credit cards are widely perceived as a secure option. They enhance the safety of credit card usage by generating a distinct, single-use code for each transaction, mitigating the possibility of unauthorised activity. Moreover, virtual credit cards contribute to protecting against identity theft since they withhold the actual credit card details. While online transactions inherently carry some risk, the use of virtual credit cards serves as a valuable measure to minimise such risks, instilling confidence and assurance in credit card users.
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