What Is A Virtual Credit Card? Protect Your Finances While Traveling

The prospect of having your credit card compromised can be terrifying, especially while traveling. And replacing a compromised credit card can be even more challenging. Every time you swipe your credit card or enter your digits on a website, you open yourself to the possibility of a security breach. But what’s the alternative? Can you truly protect yourself and your credit card while still ensuring convenient access?

Why yes, security in a digital world isn’t a pipe dream — it’s really possible.

Virtual credit cards are digital numbers that mask the numbers of your actual credit cards, allowing you to shop online without risking a security breach. Virtual credit cards are connected to your actual card, but the retailer can only store the information of your temporary virtual card, which is only valid for one day. Your virtual number changes daily, so your connected credit cards can’t be compromised.

If there’s a data breach, the hackers will only receive your virtual number, which would then be worthless. That’s because the number of the virtual credit card changes regularly, even if the connected primary credit card remains the same. Virtual credit cards add another layer of security to your credit card without restricting your ability to shop online. Virtual credit card numbers can now be generated by most card issuers.

If you’re a little confused, don’t worry. This comprehensive guide provides a detailed description of virtual credit cards, their functionality, and why they’re ideal for frequent travelers.

What is a virtual credit card?

As the name suggests, a virtual credit card is a credit card without physical dimensions, i.e., a credit card that exists solely in the digital world. A credit card is essentially just a combination of numbers without a physical form. When you shop online or through the telephone, you must enter a 16-digit primary account number. With regular credit cards, those 16 digits are permanent, but the numbers of your virtual credit card are temporary.

Every time you engage in a transaction with your virtual credit card, you can generate a completely new set of digits. As such, the number of your virtual credit card is unique for each transaction. The retailer can use the one-time number to complete the transaction, following which that number becomes useless. If the retailer uses that number again, it won’t work. If the merchant's systems are compromised, your actual credit card account will be completely safe.

In addition to transience, virtual credit cards are also extremely versatile. You can generate new virtual numbers for different stores, change your card when you want, lock or delete an account number without it affecting your primary credit card or account, and set spending limits on different numbers. Since virtual credit cards aren’t accompanied by a physical card, they can only be used for online purchases or telephonic conversations — they can’t be swiped.

However, if you connect your virtual card to Google Pay or Apple Pay, all physical stores that accept those payment options will also accept your virtual card.

Virtual credit cards are ideal while traveling

When planning your dream vacation, you must consider your payment options. You need to be assured that you’ll be able to pay for everything overseas without complications. Most people use credit cards to finance their vacations. But what if you don't have a good credit history or are worried about identity theft? This is where a virtual credit card comes in handy.

Credit card frauds are particularly prevalent when traveling overseas. Different countries have different regulations for how they necessitate handling credit card information by retailers. If you’re visiting a country with relatively lax security protocols, you risk having your credit cards compromised. To avoid the risk of credit card fraud while traveling, you can get virtual credit cards that keep your actual accounts safe.

The single-use feature of virtual credit cards makes them particularly well-suited for traveling. Tradeshift Go allows you to lock the card to a specific merchant or destroy the number after each transaction. If your touring company gets hacked and your financial information leaks, you can rest assured that your actual credit cards will still be safe.

When looking for virtual credit cards for traveling, you must ensure coverage for the destination countries and regions. You must also ensure that the card provider doesn’t charge exorbitant foreign transaction fees. This is one of the safest and most effective ways of spending abroad — claim the usual benefits of credit cards without risking fraudulence.

How do virtual credit cards work?

Virtual credit cards are electronic versions of traditional credit cards. Just like a regular credit card, a virtual credit card also comes with a 16-digit account number, expiration date, and a security code. You can create your virtual credit card number through your bank or credit card issuer and then use that temporary number instead of your physical credit card number when making purchases. This ensures that your physical credit card number is never entered into any system that can be compromised because of a data breach.

What’s the difference between virtual credit cards and digital wallets?

People often conflate the terms “virtual cards” and “digital wallets.” The confusion makes sense — both are digital forms of payment. But virtual credit cards are entirely different.

A digital wallet is an app where you can securely download and store your debit and credit card information. Once you store your information, you can easily make payments online without having to retrieve your cards. You can also use digital wallets, such as Apple Pay and Google Pay, to pay for services in-person, provided the merchant has the correct equipment.

However, a virtual credit card is an alternative to your regular credit card. You can also store the virtual credit card number in your digital wallet for easy transactions in person, but the goal of a virtual card is to mask your physical card’s number. This ensures that the retailer or merchant can’t access your card’s number, ensuring complete safety and privacy.

What are the benefits of a virtual credit card?

• Additional Security: The primary benefit of a virtual credit card is that it protects your real credit card information. Online thieves and fraudsters can only access your virtual credit card number, not your actual credit card. If there’s a data breach, you won’t have to file fraud claims, close out your existing credit cards, and then file for new ones. Only your virtual number will be compromised — not your real number.
• Convenient Usage: Virtual credit card numbers are easy to produce and generate. There are no long wait periods. The specific virtual credit card application process differs from one card issuer to the next, but most provide instant card numbers from the website or app. You don’t have to wait for long periods if you want to make an instant purchase.
• Complete Control: You have complete control over your virtual credit card. You can assign different numbers to different accounts. You can also set spending limits and expiration dates for the number or change the virtual credit card number any time you want.
• Temporary Number: Some virtual credit cards are only meant for one-time use, following which you need a new card. And some virtual credit cards can be used multiple times according to your desired expiration date. In both cases, virtual credit card numbers are temporary, so you are protected in case of a data breach.
• Complete Transparency: When you make an online purchase with your virtual credit card, the transaction details are automatically logged into the account statement of your primary credit card or bank account. As such, you don’t have to worry about separate account statements or bills — the transactions of the virtual account and linked with those from your physical credit card.
• Optimal Flexibility: You can get virtual credit cards from any country. You can get them on the fly while jet-setting around the world and get new numbers as and when you want. Furthermore, if your virtual credit card number is stolen while traveling, you don’t have to worry about your actual credit card being compromised. Because of this flexibility, virtual credit cards are incredibly popular amongst frequent travelers.

What are the drawbacks of a virtual credit card?

• Only Online Transactions: Currently, virtual credit cards are primarily used for online or telephonic shopping. Since there’s no physical card, the virtual credit card number can only be used when making payments online. If you need to purchase something in a physical store, you must use a regular credit card or connect the virtual number to a digital wallet, like Apple Pay or Google Pay.
• Refund Issues: When returning items, some retailers ask for your original payment methodand number. However, if your virtual credit card number has changed since the time of the purchase or you’re returning the item in person, you may come across problems. In some cases, retailers may ask you to settle for store credit if you can’t produce the same number.
• Reservation Issues: When you book flights or hotels, some companies necessitate that you display the card used for payment. This allows them to confirm your identity. If that happens, using a virtual credit card may pose a challenge because the number keeps changing, and there’s no physical card associated with the number used. In this case, you may need to contact your bank to verify the transaction.

How do I get a virtual credit card?

You can generally request your bank or credit card issuer for a virtual credit card, the specific process differs from one card issuer to the next. However, one of the best ways to acquire a virtual credit card is from Tradeshift, a virtual corporate credit card system for spending management. Tradeshift Go and an American Express Business credit card can help you access safe and secure virtual credit cards and track expenses across multiple cards.

Factors to consider when looking for virtual credit card providers:

• Fees: Some virtual credit cards charge monthly or annual fees. Others charge transaction fees when you use the card. You should carefully assess how frequently you aim to use the card, compare the fees, and find the best solution for your needs.
• Limits: Different virtual credit cards have different limits on your expenses. Select a virtual credit card with a limit that works for your needs and lifestyle. In addition to the limit imposed by the card issuer, you can also set additional spending limits for yourself.
• Security: Virtual credit cards are supposed to increase your security, especially while traveling. You must select virtual credit cards from reputable providers. The provider must also have excellent customer service, so you can contact them in case there’s an issue.
• Rewards: You must ensure your virtual credit card participates in rewards programs that allow you to earn cashback and miles. If you travel frequently, the travel miles you earn can help you avail of free flights and hotel stays down the line.

Virtual credit cards are a great way to protect your finances when you travel. Using such a card ensures your actual credit card number is not exposed to potential fraudsters. And if your virtual credit card number is compromised or stolen, you can simply get a new number. You don’t need to cancel your real credit card or get a new one. Virtual credit cards take the anxiety out of traveling, allowing you to pay with complete peace of mind.

So, if you're looking for extra peace of mind on your next trip or online purchase, consider getting a virtual credit card.