Aug 8 2010
How does a Virtual Credit Card work?

Credit cards have become an important part of our lives where most of us do not have to carry cash in our pockets and believe in plastic money. Credit cards also come to your rescue when you are running out of money and do not want to borrow any from your friend 🙂

An important use is also online shopping which has got easier with the use of credit cards, but with the increase in online frauds, a remedy to this has been there for a long time and is called the Virtual Credit Card.

But, what’s a virtual card? A virtual card is just like your credit/debit card; only it isn’t tangible. It was introduced to check the rising instance of fraudulent transactions over the internet.

How does it work?

I would like to explain this taking an example, let’s assume you have an account with Barclays Bank. Now, to get a virtual card you have to follow the below steps:

Step 1: Log on to your online bank account
Step 2: Register for the use of this virtual card
Step 3: Enter the amount in this section with the amount you will need for shopping
Step 4: The bank will generate an exclusive 16 digit number, a CVV2 number and expiry date for this virtual card.

You are done! You have got a new credit card for your online shopping. However, the card will be valid only for a particular period of time; usually, it’s valid for 24 hours. So, you need to use it within that time frame. It can be used at any merchant website, which accepts the service provider (VISA, Master card) mentioned in the card. You can also read about 8 mistakes to avoid when using a credit card.

Below listed are some of the features of a virtual card:

1. Mainly for online shopping, it is a safe means to avoid Online fraud.
2. It has temporary credit card numbers, which assures safety
3. It is time bound; one needs to use it within the time limit specified before the virtual card expires
4. You need to set a limit to your spending and will be eligible to avail the amount specified on the card, which is dependent on the credit limit of your credit card or cash reserves on your debit card.
5. The balance amount, if any, will be credited back to the main account.

Share

Written by

View all posts by: