En español | A virtual credit card is an electronic payment solution that lets you shop online or over the telephone while reducing the worry that hackers might steal your credit card information.
And given the recent spate of card-related security breaches at merchants such as Target, Michaels and Neiman Marcus, virtual credit cards should be pretty popular with individuals and institutions alike.
That's because virtual cards — which mask your real credit card numbers — have a number of drawbacks that give consumers and banks pause.
"Part of it is a lack of familiarity" by consumers, says Doug Johnson, a vice president and senior adviser for risk management policy at the American Bankers Association in Washington.
"Another part of it is momentum among consumers with the credit cards they presently use, which are very convenient and which often have benefits attached to them," Johnson says.
How virtual credit cards work
Virtual credit cards, also known as "single use" or "disposable" cards, provide extra safety for people making Web- or telephone-based purchases — transactions in which you don't have to show your physical credit card.
The cards offer a randomly generated substitute account number used in place of your true credit card number.
When you're shopping online and ready to make a purchase, you request a virtual card from your bank. At that point, you typically know how much you're going to spend. So when you request a virtual card, you set the maximum amount that can be used. (Your spending limit is typically tied to the credit limit on your real credit card.) You can also set an expiration date, after which the virtual card is no longer valid.
And once you buy something, the disposable card can't be used again.
That means you can shop online without ever using your real credit card number — thereby thwarting identity thieves trying to swipe your sensitive information.
All that sounds great, yet consumers who have shopped with disposable credit cards complain that they're overly cumbersome and time-consuming to use.
For instance, single-use credit cards often require extra clicks during the shopping process, or additional log-ins for added security, or sometimes even a call to a customer's home phone to verify the transaction.
All this slows the shopping experience.
"There's a great level of comfort in the existing convenience associated with using credit and debit cards," says Johnson. "Anytime you try to convince consumers that it's worth their while to do something different than what they normally do, that's a tough proposition."
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