Virtual credit card
A virtual credit card is a unique, digital payment method that provides a secure alternative to traditional debit and credit cards. It is essentially a randomly generated, single-use card number that is used for online payments. The card details and the associated funds are managed by the issuing financial institution and are not stored on the cardholder’s computer, making it a safer form of payment.
The major advantages of using a virtual credit card include:
- Increased security: Virtual credit cards are generated with a unique card number that is not linked to the user’s physical card or personal information, ensuring a high level of security for online payments.
- Improved convenience: Virtual credit cards can be used for online payments without the need to enter personal information or payment details each time.
- Reduced risk of fraud: Virtual credit cards can be used for a single transaction, reducing the risk of fraudulent activity.
Example of Virtual credit card
A virtual credit card is a digital payment method that is generated with a unique card number and used for online payments. It is managed by the issuing financial institution and not stored on the cardholder’s computer, making it a secure form of payment. The major advantages of using a virtual credit card include increased security, improved convenience, and reduced risk of fraud. A popular example of a virtual credit card is Visa Checkout, which is accepted by millions of merchants around the world and provides customers with a secure and convenient way to shop online.
When to use Virtual credit card
A virtual credit card can be used for a variety of online payments, such as purchases from websites, subscription services, and digital downloads. They are also ideal for use in scenarios where a regular credit card would be impractical, such as when making small payments. Additionally, virtual credit cards can be used to set spending limits and control the amount of money that is spent online.
Types of Virtual credit card
- Single-use virtual credit cards: These are issued with a one-time-use card number that is only valid for a single transaction. This type of card is ideal for online shopping as it limits the possibility of fraudulent activity.
- Recurring virtual credit cards: These are issued with a card number that can be used for multiple transactions, such as subscription payments. The card details are updated regularly, adding an extra layer of security.
- Multi-use virtual credit cards: These are issued with a card number that can be used for multiple transactions, but with a limit on the total amount that can be spent.
Advantages of Virtual credit card
Virtual credit cards offer a secure and convenient alternative to traditional debit and credit cards, providing increased security, improved convenience, and reduced risk of fraud. By generating a unique card number, virtual credit cards can be used for online payments without the need to enter personal information or payment details. This makes them a popular choice among consumers looking for an easy and secure way to make online payments.
Limitations of Virtual credit card
Despite the advantages of virtual credit cards, there are also a few limitations. These include:
- Limited acceptance: Virtual credit cards are not accepted by all merchants, and some may require additional information for verification.
- Fees: Virtual credit cards may have associated fees for activation, usage, and other services, making them more expensive than traditional credit cards.
- Short expiration dates: Virtual credit cards typically expire after a certain amount of time, requiring the user to obtain a new card each time.
- Pre-paid cards: Pre-paid cards are cards that are loaded with a predetermined amount of money and can be used for online payments. They are similar to virtual credit cards in that they are a form of digital payment, but they do not require the user to enter any personal information.
- Tokenization: Tokenization is a process where sensitive information, such as credit card numbers, are replaced with a token that acts as a reference to the real data. This process provides an additional layer of security for online payments, as the token cannot be used for any other purpose.
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References
- Molloy, I., Li, J., & Li, N. (2007). Dynamic virtual credit card numbers. In Financial Cryptography and Data Security: 11th International Conference, FC 2007, and 1st International Workshop on Usable Security, USEC 2007, Scarborough, Trinidad and Tobago, February 12-16, 2007. Revised Selected Papers 11 (pp. 208-223). springer berlin heidelberg.
- Gray, G., Church, K., & Ayres, T. (2015). Virtual credit card processing system. ITB Journal, 4.
- Waraporn, N., Sithiyavanich, M., Jiarawattanasawat, H., & Pakchai, N. (2009, October). Virtual Credit Cards on Mobile for M-Commerce Payment. In 2009 IEEE International Conference on e-Business Engineering (pp. 241-246). IEEE.
