Virtual credit cards
A virtual credit card is a type of pseudo payment card that functions
similarly to a real credit card but for which no physical card exists.
Virtual credit cards can exist in software or can be printed on a piece of paper for the duration of their usage.
The details necessary to use the card i.e. card number, CVV2 number, expiry date, are all generated when needed;
depending on the service provider, this is done either with a piece of software downloaded onto your computer,
on the service provider's website or from a local shop in the case of printed cards.
Who are they meant for?
Virtual credit cards are suitable for people who already have a credit card but would rather not disclose their card details to merchants.
They also function as pay as you go credit cards, filling in the void for those who cannot get a credit card.
Advantages
- They enable you to hide your real credit or debit card details from a merchant you don't trust. You allocate the amount of money you want on the card, it can be a single-use card or you can set an expiry date.
- If the service is provided by your credit card issuer, you don't have to sign up for a new account, all your virtual card details derive from your real card account.
- They are a convenient way to shop online or by telephone for those who don't have credit or debit cards.
Disadvantages
- Virtual cards are restricted to internet and telephone usage; retailers have a strict card-present policy, this means you need to have a physical card if you want to make any payments with your credit card.
- In some cases you have to download software onto your computer, this to an extent restricts you since you can't generate a new card if you're away from your computer.
- You have to generate new card details every time you need to use the service, therefore you can never memorise the details; whilst a good thing for security, the downside is that sites where you shop frequently cannot save your details, therefore you'll have to fill out the payment details form every time.
Alternatives
1. Services such as Google Checkout and Paypal can pay a merchant on your behalf, thereby hiding your details from merchants,
the downside is that you have to sign up separately with your credit or debit card details, the merchant also has to offer them as a payment option.
2. If you're unable to get a credit card as a consequence of bad credit history or being new to credit, consider
credit cards for bad credit, these have the same uses as normal credit cards.
3. A physical prepaid credit card is also a sufficient alternative, especially for those ineligible for credit cards,
e.g. those under 18, as it also has the normal uses of a credit card.