Credit cards: Virtually foolproof

Adhil Shetty Posted online: Friday, Jan 10, 2014 at 0000 hrs
Online shopping is all the rage these days as it gives you access to top brands and innumerable products from both India and abroad. You can now buy virtually anything from electronics, clothing and grocery to fruit and vegetables on the internet. However, you must remember that not all shopping portals are safe and when you enter your credit card details, including the CVV number, you expose your entire credit limit to frauds. Be wary of online transactions where there are chances of your credit card details being exposed.

Though there are safety measures that can be adopted to ensure transaction security, sometimes payments have to be made on sites that are non-secure. To address such dilemmas, banks have launched virtual credit cards, which are a one-time transaction, limited-period cards.

What they are

Virtual credit cards are, as the name suggests, online cards that are not issued physically. It is a free service offered by banks to customers who wish to make an online payment using their credit card. The major products offered under this facility in India are SBI-Virtual Card, ICICI VCC, Axis Bank e-wallet card, HDFC NetSafe and Kotak netc@rd.

Although each bank has named the product differently, the principle remains the same. You can use this facility by accessing netbanking and providing your card details. Thereafter, the bank will provide you a virtual credit card with a 16-digit card number, expiry date and CVV number. You can top up the virtual card with whatever amount you need to make a payment for and the requisite amount is credited by the bank from your account.

Safeguards

There are certain important features that make virtual credit cards safe and useful if used correctly. A customer is allowed a minimum credit limit of R100 and a maximum credit limit of R50,000 per transaction per day. The virtual credit card is valid for 24-48 hours, though ICICI bank allows a longer expiry date. You can make only one payment with the virtual card wherein you can exhaust the credited balance or a part of it. If there is any balance left, it is credited back to your account.

This facility is available to the primary cardholder only and not to the secondary cardholder.

In transactions where you may have to show the credit card the payment was made with, virtual credit cards cannot be used. For instance, if you book an e-ticket, the credit card has to be shown at the airport ó the virtual credit card will not be valid in this case. Since a virtual credit card does not have a physical existence, it cannot be cloned, making it highly secure for all transaction purposes.

Only online?

For all practical purposes, virtual credit cards can only be used online and are the perfect solution for online shopping. There may be instances where transactions can be carried out over the phone; in such cases, a virtual credit card is useful only if the sales executive undertaking the transaction is using the online payment channel on behalf of the customer.

Donít own a credit card?

A virtual card can be generated with your debit card as well. In this case, the amount topped up into the virtual card is debited from your savings bank account. Another good option is the e-wallet, which is generated and set up against your savings bank account. These options come with the same provisions and limitations as that of a virtual credit card. The only difference is that in this case the balance amount on the card is transferred back to your savings bank account and deducted immediately from your bank account. It is not billed against your card.

Apart from the banks mentioned above, the virtual card facility is offered by many private websites too. Since for topping up a virtual credit card, you have to provide your credit card details, it is important to ensure that the private site is secured too. The biggest benefit of a virtual credit card is that it is completely controlled by you in terms of validity, credit limit and usage. Therefore, you need not worry about losing it or its misuse.

The writer is CEO, BankBazaar.com