What is a Virtual Credit Card

30 May 2024
6 min read
What is a Virtual Credit Card
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In contrast to your standard credit cards, a virtual credit card (VCC) is a digital add-on feature issued on your primary credit card. As the name implies, these cards are designed for online use and include a temporary card number to safeguard your actual credit card details.

Read this blog to understand virtual credit cards, their features, benefits, and more.

What is a Virtual Credit Card

A virtual credit card is the digital version of your credit card; it operates exclusively online. Like the physical card, these online cards also come with a card number, CVV, and expiration date. Credit card issuers usually provide these cards as an additional feature. They are temporary and mainly used for online shopping.

With virtual credit cards, you get a one-time code for each purchase. This code only works for a short time. This means that if someone steals the code, they cannot use it after it expires. However, due to their virtual nature, these cards cannot be used for in-person transactions.

Features of a Virtual Credit Card

The key features of a virtual credit card are as follows:

  • Simple Application Process

Obtaining a virtual credit card in India can be done without meeting stringent eligibility criteria. The process is straightforward, and there are typically no charges associated with acquiring the card.

  • Instant Access

These credit cards are easily accessible through mobile apps and bank websites. Upon applying, you can generate a unique virtual card number instantly for online shopping and making payments.

  • Temporary Usage 

A VCC is usually valid for a short duration, lasting between 24 and 48 hours, often for a single transaction. You have the flexibility to cancel the card whenever you desire.

  • Effortless Blocking

While virtual cards enhance security by not sharing details online, you can conveniently block them if unauthorised access is suspected. The blocking process can be done swiftly online through your card issuer's website or app.

  • Credit Limit Transfer

Unused credit limits from expired virtual credit cards are seamlessly transferred to the primary credit card, ensuring optimal utilisation of the credit limit.

  • Similar Components to Physical Cards

Virtual and physical credit cards share similar features, such as spending limits and CVV codes. Transactions are authenticated using a secure PIN and OTP.

Different Types of Virtual Credit Cards

There are mainly two types of virtual credit cards. These are:

  • Single-Payment

A single-payment virtual credit card is meant for one-time use. You can use them for a specific event or transaction. For creating this card, you need to provide details like the amount of credit, the expiration date, and any linked budgets if required.

  • Multi-Use

The multi-use virtual cards are an ideal option for companies that need to make regular payments. These cards are perfect for repeat transactions, such as payments to regular vendors or monthly subscriptions.

When you create a multi-use virtual card, you need to set a recurring date for automatic payments and the amount you have to pay each time.

How to Apply for a Virtual Credit Card

Getting a virtual credit card is a straightforward process once you choose a provider. Here is how you can do it:

Steps

Details

Step 1

You must have an existing credit card account. Check whether your credit card issuer offers virtual credit card options.

Step 2

Log in to your credit card account online and look for the section ‘Virtual Card Numbers’ or search for virtual credit cards. The page will explain the process.

Step 3

Follow the directions provided by the credit card issuer on their website. You might need to download a specific app for the virtual credit card or apply for it online. They will generate a 16-digit number for you.

Step 4

Decide whether to use the virtual card number for a single transaction or set it up for recurring expenses. Some issuers may set the expiration date for you, especially if different numbers are assigned to different merchants.

Uses of Virtual Credit Card

The following are some of the uses of virtual credit cards:

  • Business Travel Expenses

Giving employees physical corporate cards for business travel can be risky due to potential misuse or loss. Instead, companies issue VCCs loaded with travel allowances to them.

This keeps their main card safe, prevents overspending, and allows them to monitor employee spending patterns.

  • Vendor Payments

Managing payments to multiple vendors with a single physical card can be challenging. Instead, use virtual cards for each vendor to set up automatic payments and gain clear visibility into your spending. This approach helps you avoid missed payments and reduces errors.

  • Employee Expenses

Single-use virtual cards are ideal for managing miscellaneous employee expenses such as referral programs, training, and gifts. You can create cards for each program that expire after use, maintaining control over funds and protecting your main card.

  • Healthcare

Healthcare providers use virtual cards to let patients securely pay medical bills online. Patients can make payments without revealing their actual card information, enhancing their privacy and security during the payment process.

  • Entertainment Venues

Sports stadiums, theatres, concert halls, and other entertainment venues use virtual cards for ticket sales to prevent fraud. You can safely purchase tickets, even in secondary markets, without risking your card information.

  • Theme Parks

Theme parks use virtual cards for seamless purchases within the park. Guests can make transactions without carrying physical cards, thanks to virtual cards stored in e-wallets or mobile banking apps.

  • Subscription Management

Virtual cards make managing and paying for your subscriptions easy. This ensures automatic payments, avoiding delays, and benefits from on-time payment perks.

Benefits of Virtual Credit Card

Here are the benefits of a virtual credit card you can enjoy:

  • Enhanced Security

With a virtual credit card, you do not need to store sensitive card details online, reducing the risk of data breaches and cyber threats. Since there is no physical card to carry or swipe, there is zero risk of theft.

  • Accessibility

Even non-credit card holders can request virtual credit cards from their banks, making online transactions more accessible to a wider audience.

  • Convenience 

These cards simplify the process of online transactions for users, offering a seamless experience.

  • No Additional Charges

Banks and credit card issuers provide a VCC at no extra cost to users, making them a cost-effective option.

  • Versatile Usage

You can use this credit card for both national and international transactions, thus offering you flexibility.

The Bottom Line

In today's digital world, where online security is crucial, virtual credit cards in India are a cutting-edge solution, offering a secure and flexible way to conduct transactions.

While these cards are not practical for in-store purchases, they are very safe and convenient for most online transactions.

You may also be interested to know

1.

How to Transfer Money From Credit Card to Bank Account

2.

10 Things to Check in Your Credit Card Statement

3.

How Do Add-on Credit Cards Work?

4.

How to Take a Loan Against a Credit Card

5.

How Does Fuel Credit Card Work? All You Need to Know
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