Insurance and Finance Blog

Are Virtual Credit Cards Better Than Physical Cards? {By: Kermil J. Fogarth}

by Kermil J. Fogarth

I just received my the credit card bill for a credit card I haven’t even activated since receiving it several months ago. It appears I have signed up for some monthly MLM deal as well as purchasing a train ticket in Washington DC. Oh, and I also bought something from hotwire.com. Now, as I say, the card has been in my wallet since I received it seven months ago and still has the little sticker on it telling me to call and activate it from my home phone. The charges only started in November. Could this have been prevented?

The latest trend is toward disposable credit card numbers but that probably couldn’t have prevented those bogus charges on my card as the thief was using my name and the true credit card number. For online shopping protection the use of virtual card numbers may be helpful. Hopefully they won’t lead to a false sense of security fostered by one-time use of a virtual number. Use of a virtual number wouldn’t have prevented the thief from getting the real information as happened to me.

This can be compared to the use of a disposable camera to prevent loss or damage to your expensive camera while you are traveling. A virtual credit card number can be used to prevent loss when making online purchases. In this case, the virtual credit card number is invalid after one use.

With widespread credit card fraud nobody is surprised when it happens and the credit card companies are constantly looking for a way to prevent losses due to fraud. The method must not inconvenience their customer when it comes to using the account for purchases either online or on person yet it must also protect consumer information. Their hope is that virtual card numbers can solve this problem for them and their customers.

Virtual card numbers are used for online purchases the same way regular credit cards are but the number is only temporary. The number is generated on demand and issued as a replacement for the actual card number to be used for a short time period. Personal information is not sent to the vendor and these numbers may be single use or they may be used for multiple purchases for a limited time before the number becomes invalid.

Virtual card numbers are intended to hide the real number from those who wish to use your information for their purposes and possibly damaging your credit. Should a secure processing center be hacked by someone wanting credit card information, your use of a virtual number would render your account safe. If they used your virtual number the result would be a denial of credit.

You expect that your card information is safe and secure at secure sites during your purchase. There is however the possibility that an employee of an online merchant could sell credit card information to criminals. While this in itself is a criminal act some people are willing to do anything if the payoff is high enough and there is little chance of them being caught.

Virtual credit card numbers biggest benefit is from protecting your valuable information online. If such a number is stolen, it is or becomes worthless in a short time. If you make several purchases with your credit card per month you may see a real benefit from using virtual card numbers to assure all your transactions are secure and your information protected.

About the Author:
Kermil J. Fogarth has extensive finance information available at his website. For more tips on protecting your credit.


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