Should You Get A Virtual Credit Card For Online Purchases?
When you make purchases on the Internet, you often have to pay by credit card. Sometimes there are other payment options available, PayPal or Google Checkout for instance. Without credit card though, you will end up with limited possibilities to shop online.
Handing out your credit card on the other hand may be a standard procedure in countries like the United States where the average consumer has more than 2 credit cards. The core problem with handing out your information is twofold. First, you need to trust the company or business that processes your credit card information on their web page. Considering that one of the largest banks did not get it right, it is fair to assume that there are no 100% safe places on the Internet to submit your credit card information to.
Some users might say that stolen credit card information may not be a big problem, as it is possible to cancel credit card payments for quite some time after the payments have been made. But that is only true if the credit card owner monitors payments regularly.
Most virtual credit cards offer better protection when shopping online. The core difference between virtual and real credit cards is that most virtual cards need to be charged before they can be used. They are prepaid cards. While it is still possible to get the credit card information stolen, an attacker has less options to squeeze out money from the account. A normal credit card could be charged for thousands of Dollars, a virtual card only for the amount that has been transferred to it by its owner. It is still recommended to check the credit card bills regularly, regardless of card and activity.
It is usually a lot easier to delete a virtual card and get a new one, in case someone managed to steal the information. Some banks and companies offer unlimited virtual credit cards to their customers, while others only one at a time.
Lets take a look at the benefits of virtual credit cards again:
- They work online just like real credit cards
- They are prepaid, and it is not possible to overdraw the account
- They are usually faster to setup and cancel
There are three downsides that we need to address. First, you get another credit card number that you have to monitor and take care of. Second, these virtual cards may come with fees that you have to pay. Some companies charge per transaction while others a yearly fee. This differs highly, and there is no rule of thumb. Some banks might even offer virtual credit cards without fees. And lastly the charging time. Depending on the bank or company, it may take time to charge the virtual credit card. At my local bank, it takes four business days to set up a prepaid credit card, and a day to charge it, which is not good if you need to make a payment urgently.
A year ago, I would have suggested PayPal for most users. But PayPal has dropped their virtual credit card offering. Your best option now is to contact your bank to see if they are offering virtual cards. If you are lucky they do and charge you little or nothing at all for it.
You find several independent companies on the Internet that offer virtual prepaid cards. Companies like Entropay charge a hefty fee for transactions on the other hand. They currently charge 4.95% for transferring money to the card.
Is there another way to get a virtual credit card online? Let us know in the comments. I for one have made the decision to get a prepaid card from my local bank, despite the negative aspects.Advertisement
Thank God its free in India and can be setup in just 1 minute and ready to use (kotak Mahindra Bank).
my bank offers me a web card and I can designate the limit; security via OTP
Specifically for Belgium (and The Netherlands) and thus in Dutch:
That’s why I love my site, thanks ;)
Sadly it seems neteller isn’t available to people in US
I’ve been using Visa Virtual from http://qiwi.com/en/ very easy to use, funds are available instantly and the fees are reasonable. At the moment it’s predominately available in Russia, although it is growing.
I use my virtual credit card for all my online purchases whenever I can. Ocassionaly, like with some government organizations, only a real credit card seems to be accepted.
I particularly like the fact I can limit the amount and the time the card is active, I usually use 1 virtual card for each online purchase .
In the UK, Cahoot stopped its’ virtual Visa card service when it was acquired by Santander and has never announced plans for a replacement.
Neteller offers a good service for UK readers offering virtual Mastercard cards and an option for a physical pre-paid Mastercard. Neteller is based in I.o.M. so purchases don’t qualify for Section 75 CCA protection and your money isn’t protected by the FSCS. However, there’s no much to worry about for purchases below Â£100, online subscriptions, etc
Found a slashdot article regarding this topic and someone brought up this site in the comments: https://www.entropay.com
Looks pretty good
I’ve had a Visa (twice) and Amex card numbers (once) stolen in the last 18 months. Previously, in 20+ years of having credit cards, this had NEVER happened, not even once. IN the USA, you are only responsible for a maximum of $50 on any lost/stolen CC but it is annoying to have to report the lost, get a new card and update the places where you have the card registered (like say with Paypal or Amazon).
I don’t want another card and I don’t want to have to load money into a card which is what the neteller card sounds like).
What I do want is to be able to generate a virtual number under any of my existing cards for online purchases that works exactly ONE TIME. Maybe they could do this with the security code using one of those Verisign/RSA keys that would generate a security code that was good for only a few minutes.
Does this exist? If not, why not?
In the USA, my DiscoverCard (Novus) allows me to generate virtual account numbers that can be used online. The charges are added to my regular Discover bill. Once an online seller uses the virtual account number (usually immediately), they are the only company that can use the number again so I can allow that number to be stored with that seller for future use. My Citibank Mastercard allows me to create virtual account numbers that can be only used one time and the charges are added to my regular Mastercard bill. As far as I know, I can create unlimited virtual account numbers with both accounts and there is no additional fee involved in creating the virtual numbers. I also use these virtual account numbers when I place phone orders.
It does exist with Citibank USA