What is a virtual credit card?

While a physical credit card uses a 16-digit card number, expiry date, and CVV code to make transactions in person or online, virtual credit cards may work a bit differently. A virtual credit card may also have similar credentials, especially if it’s a digital version of an issued physical card, but it may not use these details when making purchases.

Because virtual credit cards are often accessed via separate payment apps like Apple Pay, Google Pay or Samsung Pay, your card information can be isolated from merchant payment terminals and online checkouts. Some virtual credit cards generate random strings of single-use numbers in place of traditional credit card credentials – you’ll be effectively using a different card for every purchase.

Because your card details and personal information aren’t received by the merchant when making a transaction, and don’t appear on your purchase receipt, it becomes much harder for scammers and fraudsters to steal your data and your identity. It’s not dissimilar to using a Virtual Private Network (VPN) to help safeguard your information when browsing the internet.

One of the biggest potential advantages of a virtual credit card is security. Because these cards add extra layers of protection and encryption to your personal data, malicious actors will likely have a much harder time trying to access your details.

On a more personal level, using a virtual credit card can mean less worry about your physical credit card being damaged, lost or stolen. You can travel light, managing your finances with your phone. And even if you misplaced your physical card, you could still have online access to your credit.  

Some businesses and corporations use virtual credit cards to help manage employee expenses without issuing physical cards, which can help ensure security.

While a virtual credit card can’t be lost or stolen in the same way as a physical card, it can still be compromised if you’re not careful with your personal information and passwords. Scammers or cybercriminals could target you and bamboozle you into handing over access to your accounts, including your virtual credit card. While your bank or fintech will do everything they can to keep your finances secure, it’s essential to stay vigilant against scams.

You may not be able to use a virtual credit card everywhere you go. Some merchants may not have payment terminals or checkouts that accept payment apps. Plus, if you or the merchant lose access to the internet and/or the payment networks,  you may also lose access to your credit.

Virtual credit cards can be used to make purchases, but may not offer all of the same functionality as traditional credit cards. For example, some hotels may want to put a temporary hold on a credit card in case of incidental charges, which may not be possible with a virtual card. Processing refunds can also be tricky with a virtual credit card.