A Virtual Credit Card May Offer Extra Security

In an unsecure world, using a virtual credit card number could be the best way to prevent credit fraud.

Credit and debit card fraud cost you time, aggravation and even money in some cases. But a new technology is catching on that could help you minimize your risk of credit fraud. A recent article on CNBC explained how virtual credit card numbers could offer greater protection. And while this won’t eliminate your risk of fraud, it could slow it down and help minimize all that hassle and potential cost.

What is a virtual credit card?

Virtual credit card numbers offer added fraud protection for online transactionsA virtual credit card is a temporary, randomly generated, 16-digit number that can be used in online transactions. These temporary numbers can be set up for a specific transaction or set of transactions from a specific merchant. That means if someone tries to use the card for a different transaction or at a different retailer, it gets declined.

A virtual credit card number can also be set up to have a specific dollar limit. That way, even if charges are made to the same merchant, they could only go up to a certain amount. They also generally have expiration dates, so if someone uses the number after that date it gets declined, too.

The idea is that by using a temporary number with these limits in place, you protect your real account. If a cybercriminal gets access to the number, they would be very limited in where and how much they could abuse your account. If a fraudulent charge managed to occur, the damage and hassle of dealing with it would be minimal.

Even better is virtual debit card numbers

This virtual technology also applies to debit cards. This is crucial, since the financial liability you can face with debit fraud can be greater. With credit cards, your maximum liability is $50. However, with debit cards, the maximum limit depends on when you report the fraudulent charges:

  • If you report it within 2 business days, it limits your liability to $50
  • Your liability is limited to $500 if you report it within 60 days
  • However, if you report the stolen card after 60 days, there is no limit to your liability

That can be a big risk. If you don’t monitor your accounts closely and depending on how you pay your bills, you might not notice immediately. A cyberthief could drain your bank account and you wouldn’t be able to get any money back.

Even if you have auto bill pay set up through your checking account, you might not know until the first insufficient fund alert. At that point, you’d at least be on the hook for $500. For most people, losing that much you definitely hurt your budget.

How do I get virtual credit card numbers?

Currently there are two ways to get virtual numbers:

  1. Your credit card issuer offers them with your account.
  2. You go through a third-party virtual service provider.

So, some major card issuers already offer this service to customers. Bank of America offers it to Visa and MasterCard holders, as long as you sign up for online banking. Citibank also has a similar service, according to PCmag.com. In addition, MasterCard offers this service on all their cards, but only some card issuers opt in. Other providers used to offer these numbers, but stopped. That includes Discover, American Express and PayPal Debit.

That leaves third-party services. Basically, you sign up for their service – usually with a monthly fee – and then you can generate virtual numbers. This works regardless of whether the card issuer offers virtual number generation or not.

Press Inquiries

April Lewis-Parks
Director of Education and Public Relations

AParks@consolidatedcredit.org
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