While the implementation of chipped EMV credit cards has eliminated a large portion of card-present (CP) fraud, the amount of card-not-present (CNP) — read: online — credit card fraud has steadily risen over the last few years.
In an effort to combat CNP fraud, several card issuers and third-party companies have developed what are called virtual credit cards.
Designed for use when shopping online, virtual credit cards are randomly generated, single-use credit card numbers that can limit an online fraudster’s access to your real financial information. This may sound like some complex bit of science fiction turned non-fiction. But you don’t need to be a tech whiz to use virtual credit cards. Keep reading for an overview of how these fraud-inhibiting cards work.
Limited Issuers Offer Virtual Credit Cards
Although virtual credit cards can be useful, they’re still somewhat of a novelty in the consumer credit card world. Popular payment processor, PayPal, was one of the original sources for virtual credit cards, but the company has long since discontinued the service.
Today, only a handful of major credit card issuers offer the ability to create virtual credit cards for online shopping: Capital One, Citibank, and Bank of America.
Capital One’s virtual credit card service is available for all Capital One credit cards through Eno®, an “intelligent assistant” that helps Capital One customers with a variety of tasks. To use Eno® to create a virtual credit card number, you’ll need to be on a computer and have the Eno® extension for Google Chrome or Mozilla Firefox.
Capital One® Venture® Rewards Credit Card
This card is currently not available.
Only select Citi cards will be eligible for a virtual credit card number, but the process is pretty straightforward for those cards that do qualify. Simply register your Citi credit card in the program, and then you can generate a virtual credit card number through the online interface. Virtual card numbers are only good for up to 12 months.
Beyond the credit card issuers, there are a number of third-party companies that have also explored the idea of virtual credit cards.
For example, third-party platform, Privacy, offers single-use and merchant-locked virtual cards that can be used through a Google Chrome extension. Privacy virtual cards act more like debit cards than credit cards as they are funded directly by a US bank account. There’s no fee to use the service, as Privacy gets a portion of the interchange fee paid by merchants.
Money transfer provider, Entropay, also offers a similar virtual card service, though it’s structured a bit more like a prepaid card, with a 1% fee to add funds to your account. Entropay users can create an unlimited number of virtual cards over the life of their account, with 10 active cards at any given time.
How Virtual Credit Cards Work
While each issuer of virtual credit card numbers will likely have its own method, the general idea is still the same: an operational credit card number is randomly generated with a computer algorithm, similar to how modern EMV chip cards operate for card-present purchases.
Once generated, virtual credit card numbers can be used to make online purchases just as a regular credit card number would be used at checkout. The difference is that most virtual credit card numbers have limitations on where and when they can be used that help prevent them from being used by data thieves.
In other words, instead of putting your actual credit card number into the payment box when shopping online, you can mimic the EMV technology in your chip card by using a random number that’s specific to that merchant or transaction and can’t be used to make unauthorized purchases anywhere else.
The actual limitations set for a specific virtual credit card will depend on its type and issuer, though most providers will allow you to set individual spending limits for each virtual credit card you generate.
Most virtual credit card numbers are one of two types. Single-use virtual credit card numbers are as they sound: only good for a one-time purchase. Once that transaction is complete, the number is no longer valid and can’t be used for additional purchases.
Merchant-tied virtual credit card numbers can often be used for more than one purchase, but they can only be used with a specific merchant. These cards will typically have built-in expiration dates — usually up to 12 months — with the ability for users to set their own expiration dates for shorter periods.
Mobile Wallets, Like Chase Pay, Aren’t Virtual Credit Cards
One thing to keep in mind when investigating ways to shop safer online is to understand the difference between virtual credit cards and other digital payment methods. Mobile wallets, for example, aren’t the same thing as virtual credit cards, though they can offer a similar feeling of security when shopping online.
Instead of providing alternative credit card numbers, mobile wallets allow you to associate your credit cards with a specific service, which acts as an intermediary for payments. Chase Pay, for instance, allows you to use any of your Chase credit cards without needing to provide your card number to participating merchants.
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
- Earn unlimited 1.5% cash back on all purchases.
- 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
- No annual fee
- No minimum to redeem for cash back
- Cash Back rewards do not expire as long as your account is open
0% 15 Months
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year
- 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases. $0 foreign transaction fees.
- Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards. For example, 50,000 points are worth $750 toward travel
- 1:1 point transfer to leading airline and hotel loyalty programs
- Access to 1,000+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That's 3X points in addition to the 2X points you already earn on travel.
15.99% - 22.99% Variable
Of course, Chase is hardly the only name in the mobile wallet game. Mastercard’s Masterpass is growing in popularity, Visa Checkout is available for many merchants, and PayPal has long held a good portion of the digital payment market share.
But it’s the technology companies that seem to be making the most inroads into getting users onboard with mobile wallets, thanks in large part to their devoted mobile phone users. Apple Pay, Google Pay, Samsung Pay, and Microsoft Wallet are all vying for acceptance at retailers around the country.
Are Virtual Credit Cards Worth Having?
Like it or not, credit card fraud is an unfortunate way of life in our modern economy. When credit card issuers close a doorway to fraud, the relentless fraudsters open their own metaphorical windows.
And while credit card users generally can’t be held responsible for unauthorized purchases — beyond the legally allowed $50 maximum, that is — credit card fraud can still be a major inconvenience that may take weeks to clear up.
So, can virtual credit card numbers eliminate the risk? A major chunk of it, sure. And they can offer a good deal of peace of mind. But, that’s not to say they’re a perfect solution. Virtual card numbers have their own downsides.
For one thing, virtual credit card numbers are only as secure as the company that issues them, particularly if you use a third-party company. If the issuer gets hacked, your information could be at risk.
Virtual credit card numbers are only as secure as the company that issues them.
Additionally, using a virtual credit card number may prove to be a problem when making reservations with a hotel or car rental agency, as these places often require the credit card used to make the reservation be presented at check-in to verify your identity.
Another drawback of virtual credit card numbers is in the case of returns, as most merchants require refunds to be issued to the card used to make the original purchase. This can be particularly challenging with merchants that require you to have the original card present for the return.