The biggest benefit is that the virtual bank card uses one token for a single transaction. Once it is utilised, it is discarded and cannot be reused
By Gaurav Garg
The easiest way to pay for your purchases today is the credit card. Swiping the card or pushing it into a chip reader is being replaced by simply tapping the card on a reader or a computer screen, which is convenient to both the buyers and retailers. However, increasing the ease of paying has also increased the chances of being hacked and possibility of fraudulent activities. The same identifying information is used whenever you use your credit card. This means that once the data is stolen it can be used by anyone, not just you.
Virtual credit cards help to solve the security problems of credit cards. These cards generate a token for every single transaction, which is transmitted between the bank and the retailer to put through the transaction. These can be used online or over the phone. Once you sign into your account, you can generate a one-time token, which includes a unique card number and security code. If your virtual card is linked to your physical credit card, transactions will show up on the credit statement as usual. Virtual credit cards are available in two ways: Either directly from your bank if you have a credit card issued by one of the banks that offers this service, or by linking a pre-existing card from another bank to an online service.
The major benefit of using a virtual credit card is that the virtual bank card processing uses one number to get a single transaction. After the number is utilised, it is discarded and cannot be reused. The hackers are not interested in these virtual cards as these cards expire within a short while. You do not have to set up special software or hardware, neither on the buyers’ side nor on the sellers’ side. The processing fee is incredibly low in comparison with other payment schemes on the internet. Purchasing done by the consumer is anonymous.
The disadvantage is that there is generally a lengthy wait relating to the sale, plus the payment being deposited in the merchant’s account. At the consumer end, when you buy tickets for a movie or for a flight, you are likely to show the credit card. If you have used an online card, the temporary number will not match the credit card number you carry. And recurring expenses turn into a hassle because by the time of the next purchase period, your card number will probably have expired.
However, despite these factors, with the security and convenience that virtual cards offer, and their increasing acceptance in a number of sectors, the future of these virtual cards and virtual prepaid cards seems very bright.
The writer is head of research, CapitalVia Global Research