What Is A Virtual Credit Card?

If you’re concerned about security when you’re shopping online, a virtual credit card could be a solution worth thinking about.

A virtual credit card works in much the same way a regular credit card when you’re shopping online, but is designed to offer further security. Currently only a select number of financial institutions offer their customers the option of using a virtual credit card for online transactions.

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What is a virtual credit card?

A virtual credit card, also known as a ‘controlled payment number’, is a temporary, randomly generated 16-digit number which you can use to make online payments. The number is linked to your credit card but is designed to make it more difficult for  unscrupulous online vendors or criminals to commit fraud in the same way that they could with a normal credit card number.

Virtual credit cards are usually managed through a digital wallet such as Apple Pay, Samsung Pay, or Google Pay.

When you’re ready to check out or make a payment, where you’d usually enter your regular credit card number, you simply enter the number of your virtual credit card and proceed as usual.

Depending on the provider, you may be able to set a separate credit limit and expiry date for the virtual credit card to further reduce your chances of falling victim to credit card fraud.

Some physical credit cards also offer protection to consumers against fraud. The table below displays a snapshot of 5-Star low-fee credit cards with fraud protection insurance on Canstar’s database, sorted by provider name (alphabetically).The products and Star Ratings displayed are based on a monthly spend of $4,000.

You can also generate your own comparison of credit card products which may be better suited to your individual circumstances using our credit card comparison tool.

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Who offers virtual credit cards?

Virtual credit cards have been available to consumers for several years now, but so far they seem to have failed to capture the attention of the wider population. Back in 2016 Cash App (then known as Square Cash) introduced a feature which allowed users to make payments using a virtual credit card, but the announcement failed to garner much traction.

If you are interested in getting a virtual credit card, you may be able to apply through the bank or financial institution that provides your credit card, if they offer virtual credit cards.

Alternatively, you could use a third-party service to generate a virtual credit card for you.

Virtual credit cards are less common in Australia than in the US, so you may have a tricky time finding a financial institution or third party provider that offers them as a feature. ANZ and Westpac only offer them to businesses, however NAB allows its customers to make sub-$100 transactions using its NAB Pay mobile app by way of a virtual credit card.

Additionally, Visa offers ‘Visa Virtual’ cards in Australia, which essentially function as virtual credit cards.

What are the possible pros and cons of using a virtual credit card?

The primary benefit associated with virtual credit cards is security. Using a virtual credit card puts a degree of separation between online merchants and your actual credit card details, meaning you may be less likely to fall victim to credit card fraud. Additionally, the ability to choose a credit limit and expiration date for your virtual credit card could reduce the risk of fraud.

The ability to manage virtual credit cards through the digital wallet of your choice also makes them a convenient payment option – instead of having to pull a card out of your wallet, you may be able to simply grab your phone and make the payment from there.

It’s worth noting, however, that while virtual credit cards are potentially a safer way to make online transactions than your physical credit card, they’re not entirely fraud-proof. So, while using a virtual credit card may help keep your money safe while you’re shopping online, it may benefit you to first make sure that your credit card comes with fraud protection insurance.

And as we mentioned previously, the range of Australian providers which offer virtual credit cards is extremely limited. You can compare credit cards and search for  the right card for you with Canstar.

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