Virtual Credit Cards Explained: Benefits, Uses and More

Digital payments in India have skyrocketed, growing from 162 crore transactions in 2012-13 to over 14,726 crore transactions in 2023-24, marking a 90-fold increase in 12 years. As more people use online payments, the demand for secure and efficient methods to make these payments has grown significantly. Virtual credit cards have emerged as an innovative answer to this need. 

Virtual credit cards offer the convenience of regular credit cards but with better security, making online shopping much easier. This guide will cover everything you need to know about virtual credit cards, including what they are, their benefits, and how they can be used.

Table of Contents

• What is a Virtual Credit Card?
• How does a Virtual Credit Card Operate?
• Features & Benefits of Virtual Credit Card
• Disadvantages of Virtual Credit Card
• Comparison between Virtual Credit Card and Physical Credit Card
• Best Virtual Credit Cards in India

What are Virtual Credit Cards?

Virtual credit cards function similarly to traditional credit cards but in a digital format. They are connected to your primary credit card account but do not exist in physical form. Each virtual credit card comes with a unique card number, expiration date, and often a predefined spending limit, similar to the value associated with a gift card. These cards can be used for online purchases in the same way you would use a regular credit card. However, any transactions made with a virtual credit card are deducted from the credit line of your main credit card account. This setup offers an added layer of security and convenience for online shopping.

How does a Virtual Credit Card Operate?

Virtual credit cards operate by generating a unique card number for each transaction or for a set period. You typically create a virtual credit card through your bank's online interface connected to your main credit card account. Here's a look at how they work:

• Unique Numbers: Unlike a physical card with a single number, virtual credit cards generate temporary 16-digit numbers with unique expiration dates for each transaction.
• Security Layer: When you use a virtual credit card on a website, you provide this temporary number instead of your real card details. This way, even if the merchant's system gets compromised, your actual credit card information stays safe.
• Transaction Processing: The transaction process itself is similar to that of a regular credit card. The virtual card number is linked to your existing credit card account, so the purchase goes through using your available credit line. You'll see the transaction reflected in your regular credit card statement.
• Limited Use: Virtual credit cards are primarily for online transactions and some phone orders. They typically can't be used at physical stores unless you can use a digital wallet like Apple Pay or Google Pay that accepts virtual cards.

Features & Benefits of Virtual Credit Card

Virtual credit cards come with several features and benefits that make them an attractive option for secure online transactions. Here's a detailed look at what they offer:

Features:

• Unique Numbers: Virtual cards typically generate unique credit card numbers for each purchase. This means the merchant you're buying from never sees your actual credit card number, reducing the risk of data breaches.
• Temporary Use: Many virtual cards are valid for a single transaction or a short period (24-48 hours), adding another layer of security. 
• Spending Limits: You can often set spending limits on virtual cards, which can help you stick to a budget or prevent unauthorised charges.

Benefits:

• Enhanced Security: Since virtual cards don't store your actual card information, they offer better protection against fraud and data breaches compared to using your physical card online.
• Convenience: They are readily accessible through mobile apps or online accounts, allowing for quick and easy online payments without needing your physical wallet.
• Budgeting and Tracking: Spending limits and the ease of tracking transactions with virtual cards can help you manage your finances more effectively.

Disadvantages of Virtual Credit Card

Virtual credit cards, while offering security benefits, do come with some drawbacks:

1. Not all merchants accept virtual cards yet, so you might need to switch to a regular credit card for some purchases.
2. Virtual card numbers are typically temporary and expire after a set period, making them unsuitable for recurring payments like subscriptions.
3. Getting a refund for a purchase made with a virtual card that has already expired can be complicated.
4. Some virtual card providers may charge fees for using the service, so be sure to check the terms before using one.
5. Virtual credit cards require access to technology, which may pose a challenge for some users.

Comparison between Virtual Credit Card and Physical Credit Card

Feature	Virtual Credit Card	Physical Credit Card
Security	Enhanced security features, such as unique card numbers for each transaction, reduce the risk of fraud and identity theft.	Lower security compared to virtual cards, susceptible to theft or skimming.
Physical Presence	It exists only in digital form; no physical card is required.	A physical card is required to be present for transactions.
Privacy	Provides privacy by masking real credit card details, reducing the risk of exposure in case of data breaches.	Real credit card details are exposed during transactions, increasing the risk of identity theft.
Convenience	Instant generation and usability, so there is no need to wait for physical card delivery.	Requires physical card delivery and activation before use.
Control	Allows setting spending limits, expiration dates, and usage restrictions for each virtual card.	Limited control over spending, typically managed through credit limits and account settings.
Technology Dependency	It relies on technology and internet connectivity; disruptions could affect card usage.	Less reliant on technology; can be used for offline transactions.
Physical Space	No physical space is needed to carry cards.	Requires physical wallet space for carrying cards.
Acceptance	Growing acceptance may not be universally supported by all merchants.	Widely accepted by most merchants and businesses globally.
International Usage	Often accepted for international transactions, with competitive exchange rates and lower fees.	Accepted for international transactions but may incur higher currency conversion fees.

Best Virtual Credit Cards in India

1. Fibe Axis Bank RuPay Credit Card
2. HDFC Bank UPI RuPay Credit Card
3. Yes Bank Rupay Credit Card

You must compare your favourite credit cards here.

Conclusion

In conclusion, virtual credit cards represent a significant leap forward in how we approach online transactions, offering an additional layer of security that traditional physical credit cards might lack. With unique card numbers for each transaction and the ability to set spending limits, they provide peace of mind for those concerned about digital payment safety. 
While there are some drawbacks, such as acceptance issues with certain merchants and potential fees, the benefits—enhanced security, convenience, and budgeting capabilities—far outweigh these concerns for most users. 
Whether you're a frequent online shopper or simply looking to add an extra layer of protection to your digital transactions, considering using a virtual credit card could be a wise move.

Check out the all Physical Credit Cards here.

FAQs on Virtual Credit Cards

1. How do I get a virtual credit card?

There are two main ways to get a virtual credit card:

• Through your existing bank: Many banks offer virtual credit cards as an added feature for their credit card holders. Check your bank's website or mobile app to see if they offer virtual cards and how to request one. If your bank does offer them, the process is usually quick and easy, and you might even get instant approval.
• Through a prepaid card provider: Some prepaid card providers also offer virtual cards. These cards work similarly to a virtual credit card linked to your bank account, but instead of drawing funds from your credit line, they use funds you pre-load onto the card.

2. Which bank provides a virtual credit card?

In India, several banks offer virtual credit cards. Here are a few examples:

1. HDFC Bank: NetSafe Virtual Credit Card 
2. Axis Bank: Axis Bank FreeCharge Credit Card 
3. Kotak Mahindra Bank: Kotak Mahindra Bank Netc@rd 
4. Standard Chartered Bank: Standard Chartered Virtual Credit Card 
5. SBI (State Bank of India): SBI Corporate Virtual Credit Card 

3. How do I buy something with a virtual card?

Using a virtual card for purchases is similar to using a regular credit card, but wherever you enter payment information. Here's how it works:

• Checkout stage: When you reach the checkout page on a website or app, look for the payment method section.
• Choose a virtual card: Select the option to pay with a credit card and see if there's a way to choose between saved cards. If your virtual card information is already saved in your browser or digital wallet, you might be able to select it directly.
• Enter details manually: If your virtual card info isn't saved, you'll need to enter it manually. This includes the virtual card number, expiration date, and CVV code (usually a 3-digit code on the back of the card).
• Verification: Some websites might require additional verification, like a one-time code sent to your phone or email linked to the virtual card.
• Complete purchase: Once everything is entered and verified, proceed with the purchase as usual.

4. Are virtual credit cards legal?

Yes, virtual credit cards are legal and a legitimate payment option offered by many reputable banks and financial institutions. Here's why:

• Issued by major card companies: Major credit card networks like Visa and Mastercard often back virtual credit cards, which follow the same security protocols and regulations as physical credit cards.
• Linked to existing accounts: Virtual credit cards are typically linked to your existing credit card account. They function as an additional security layer, generating unique numbers for online transactions without exposing your primary card details.
• Offered by banks: Many banks offer virtual credit cards as a built-in feature for their credit card holders, strengthening their legitimacy as a secure payment method.

5. Is it safe to use a virtual credit card?

Yes, virtual credit cards are generally considered safe to use and can even be safer than traditional physical cards in some ways. Here's a breakdown of the security benefits:

• Reduced exposure of card details: Virtual cards typically use temporary card numbers for each transaction. This means even if a website experiences a data breach, your actual credit card information is not compromised.
• Potential spending limits: Many virtual cards allow you to set spending limits, which can help you control your budget and prevent unauthorised charges.
• Single-use option: Some virtual cards can be set for single-use only, adding an extra layer of security for specific transactions.
• Quick cancellation: If you suspect your virtual card information might be compromised, you can usually cancel it immediately through your bank's app or website. This minimises any potential damage.