Credit Card Learning Center

Virtual credit card

You've heard of virtual reality? Something that looks real, but isn't?

The Internet is good for virtual this and virtual that. It's also responsible for the virtual credit card. The wired world has opened the doors to a lot of things, some of them bad. Stolen identities and stolen credit card numbers are among them. The virtual credit card is part of an arsenal of tools aimed at defeating the bad guys.



Almost 10 million Americans were victimized by identity thieves in 2002. Theft related costs to businesses totaled $48 billion and people like you and me lost a total of $5 billion, according to the Federal Trade Commission.

The weakness of credit cards has been that long string of 16 numbers, otherwise known as your card number. Thieves were raiding the garbage to find those numbers printed on sales slips. They would then make telephone or online purchases with the stolen number. Credit card companies, smarting from billions in losses, issued a second number, printed on the back of the card. Buy something online now and you are asked to supply this number, too.

Random numbers generated
But with billions of credit cards in circulation, and hundreds of millions of online transactions every day, there is plenty of opportunity for credit card numbers to be stolen. So now there is the virtual credit card. It doesn't quite resort to virtual numbers, but close. Every time you use a virtual credit card, a new random credit card number is issued. And it's good only for the transaction you are making at that time. Were a hacker to get hold of the number, it would be useless to them.

The biggest fear of online shoppers is that their credit card data and other personal information will be stolen. By issuing virtual numbers, card issuers hope to encourage more online shopping while also cutting their losses due to fraud. If they are successful, we could see APRs drop across the board.

The virtual credit card is not a separate piece of plastic. If your card company issues virtual numbers, all you have to do is register your current card to take advantage of the program.

Free service
The service is free to holders of Citibank credit cards. To use the technology, you simply download special software and provide a user name and password. When you want to buy something online, you enter that user name and password for authentication and a random substitute credit card number is generated. This random number is transferred into the retailer's checkout form. It then cannot be used at any other retailer site. Each random number is tied to the cardholder's actual Citibank card.

Discover's Deskshop offers different technology developed in Ireland. It also uses virtual credit card numbers, but it also takes away the chore of filling out those long online checkout forms. Once you hit the checkout to complete your online shopping, a virtual credit card pops up on the screen. Click and it fills out all the details and provides the merchant with a virtual number. It even shows you how much credit is left on the card and lets you look at your account.

Technology for virtual credit cards has been around since 1999, when they were first issued in Europe. Among other issuers are MBNA, American Express, Visa and MasterCard.

One of the side advantages of these cards is that they have an expiry date. That gets around that annoying problem of subscriptions being renewed automatically when, perhaps, you don't wish them to be.

Lowest Fixed APR Rate: 5.50%

Lowest Variable ARR Rate: 8.49%

Total Credit Cards in Database: 102