Virtual cards are temporary card numbers which are used to make transactions in neobanks. It is the latest fintech offer, provided to the account holders for ease. These cards can be generated through a mobile app or website, tokenized by your smartphone for use. Virtual cards do not have physical existence and they are only for one time use.
The idea to launch the virtual cards brought out to secure neobanking and prevent frauds. The user is granted a new virtual debit or credit card number to withdraw, pay, transfer the funds or make any transaction. And as soon as the consumer uses the number, it expires.
What are Virtual credit cards ?
With the virtual credit cards, it is easier to make online purchases over the phone. The virtual credit card number routes to the credit lines and you wouldn’t have to use your original credit card for the transaction. Since a virtual credit card number is for temporary use, you cannot make a second purchase with the same number used previously. Because it expires right after the single-use. Just like the real credit card, virtual credit cards also need to be repaid.
What are Virtual debit cards ?
Just like the virtual credit cards, virtual debit cards are also temporary, having a short expiry with similar services. Whenever you want to make a transaction, a randomly generated debit card number will be sent to your mobile. After the use that code, it will automatically expire and you cannot make any more transactions with the same number. The transaction routes directly to the checking account balance and will be subtracted, just like the original card works.
How do virtual cards work?
Virtual card numbers are generated only for a single-use. Generated within seconds, these numbers are granted to the consumers right before they make a transaction. They get activated and ready to use within a minute. Their work for purchase, payment, transfer or withdrawal can be specified or limited according to the consumer’s choice. It means that the virtual card number can also work only upon the specified transaction that you allow. For example, you can generate a card number and specify it for a particular purchase on a particular amount.
It is so if anyone tries to use the number for other reason, it will be declined. And after the single-use, the number gets expired so there will be no chance that someone will reuse it.
Who can use virtual cards?
Both business owners and consumers can use virtual cards. Consumers can obtain a card number for an online transaction from their card issuers. And the same as it is, business owners will also acquire virtual cards for online trade. And only a single consumption of the virtual card numbers is making them popular. Because they are totally useless once availed. Plus it is just a code for authorization of the transaction and does not leak out your information or any detail.
Benefits of virtual card
A virtual card serves several benefits that are listed below;
- A virtual card is more secure than a plastic card. It is impossible to steal. While if a plastic card gets stolen, you would have to go through a process to block the stolen one and get a new.
- It does not provide access to your account and personal details. While the plastic card can if stolen or hacked.
- Since it is a temporary card that does not physically exist, you would not have to worry about keeping it safe.
- You can close it or decline it anytime you want, without going through a lengthy process.