A virtual credit card is a unique 16-digit computer generated number used to settle a specific vendor payment transaction issued for a specific dollar amount. Designed as a more secure alternative to ACH and check payments, virtual cards are essentially “card-less” credit card payments. Virtual cards can be processed by anyone who accepts traditional credit card payments, which typically includes the vast majority of your vendor community.
For both consumers and merchants alike, payment security is a paramount concern. Consumers want to know that their private details – and money – are safe when providing their credit card to a merchant for a purchase. Merchants also want to maintain customer satisfaction and avoid complications in their transactions by knowing purchases are legitimate and processed safely.
What are Virtual Cards?
Virtual cards are purely-digital credit cards created for a single purpose, at a pre-specified amount. Essentially, they are “cardless” credit card payments.
Virtual cards are generated in a couple of different ways: either by a direct request from the card holder to the issuing bank, or through the help of eWallet payment apps such as Apple Pay or Google Pay, which allow customers to complete payments through their mobile phone.
Virtual card parameters can be set for one-time purchases, or for recurring payments to a single merchant. They can be used with any merchant who accepts traditional credit card payments online.
Why use Virtual Cards?
When used properly, virtual cards are safe and useful for consumers and merchants alike:
- Cards are valid only for a specific time period, set by the card issuer. This means the card is only available to be used in a limited time window before it is canceled.
- Card holders have a minimum and maximum credit limit threshold set per transaction, per day.
- Typically, virtual cards allow the holder to perform one transaction per virtual card, using all of the balance allotted or only a portion of it. Depending upon the issuer, exceptions may be made for recurring payments to the same merchant.
- In the case of a remaining balance on the virtual credit card, it will be credited back to the original customer account.
- Virtual credit cards will only be issued to the primary account holder, not secondary card holders.
- Since virtual cards are digital (non-physical), it is nearly impossible to duplicate them. This means they are highly secure and safe for all online transactions.
- By using virtual cards, consumers lower their risk of fraud, and their personal information remains relatively anonymous, since the information transmitted to the merchant for transactions on these “temporary” cards is limited.
- Merchants benefit from the use of virtual cards by enabling them to accept a wider range of payments from more customers: virtual cards can be used for international purchases in places where local cards may not be accepted.
- Additionally, merchants benefit from the peace of mind of knowing the transactions they have processed using virtual cards are true, and valid. Since virtual cards are nearly impossible to duplicate and therefore use for fraudulent transactions, merchants save time and money by reducing the instance of disputed charges.
Virtual cards carry many benefits to both consumer and merchant. For merchants using a secure payment processor like DPO, virtual cards can lower the cost of processing workflows, streamline internal processes, and offer additional security and peace of mind to both the business and customers alike.