May 9, 2020
5 mins read

Are virtual credit cards secure?

Virtual Credit Cards Security
Quick summary

Virtual credit cards have become a popular payment tool for businesses who want to keep control of expenses and enable employees at the same time. But are they the right choice for bigger corporations when it comes to security?


Each consumer knows what a credit card is, how to shop with it, and what are its biggest benefits. Credit cards have long been a part of our daily lives. They continue to evolve thanks to technological advances that seek to meet the ever-changing needs of modern clients.

Nowadays, credit card details are being memorised in various shopping websites and apps for the ease of payments. This way they have inevitably become vulnerable in case of security and data breaches.

For this reason, there has been greater interest in ways to transact more securely in the light of recent events and data breaches.

Since their invention back in 2009 virtual payment cards have become a better way for individuals to spend more securely and privately online.

Virtual credit cards facilitate not only individual consumers, but also corporations. In this case business owners provide their employees with fast and convenient access to a corporate expense account without issuing personal or physical corporate cards. Thereby, a virtual credit card is an ideal way to monitor transactions and enable payments at a lower level.

HBR report: how to drive business strategy and growth

What types of payment cards exist today?

Depending on the account holder and the money, there are three main categories of payment cards, each one has its own characteristics:

  • Credit card is payment tool for purchasing goods or other services. Unlike a debit card, the amount for a credit card purchase is not withdrawn from the cardholder's bank account, but from the credit limit granted by the bank or credit institution. In some cases, the credit card is encoded so that the limit is exceeded. Credit cards are important for creating and building a credit history that affects loan terms, such as consumer loans, mortgages and car leases.
  • Debit card is another payment tool for the purchasing goods and services, on and offline. In addition, debit cards can also be used to receive money such as payroll. For purchases, unlike a credit card, the purchase amount is not deducted from the limit granted by the credit company or the bank. But directly from the bank account or other prepaid account of the cardholder. The debit card can be issued in several copies upon a cardholder request.
  • Prepaid card is linked to the account of the issuing institution so you don’t need to be a customer of the bank or have an open bank account. In fact, this type of card may be provided to third parties as opposed to debit/credit cards and its typical purpose is a gift.

Depending on the type of holder (physical or non-physical), there are plastic and virtual payment cards.

  • A regular plastic (or physical) card can be used both on and offline in an ordinary shop.
  • Virtual credit cards don't have a physical carrier and cannot be used in a regular shop. A virtual card is just a set of data (a card number, an expiration date, a security code and a pin code) that can predominantly be applied to online payments.

How does a virtual credit card work?

The temporary card number, broadly known as virtual debit or credit card number, is generated through a website or mobile application. Virtual credit cards can be used for most online purchases and not necessarily come with physical cards.

By using virtual cards, you can decrease the amount of the so-called ‘personally identifiable information' you share on places you buy from. Generally, you can set a maximum charge or spend limit on the virtual credit card. This prevents you from being overcharged, but also locks merchants and restricts card usage elsewhere in case the merchant is breached.

Another cool feature is that you can not only easily issue, but also close your card with just a few clicks. Moreover, all of the transactions made with a virtual credit card are visible online in the primary credit card account statement.

Are virtual credit cards more secure than physical ones?

In fact, a virtual credit card is simply a credit number. The issuer of the card provides special software that is installed on the user's PC. Hence, an intermediary credit card number is being generated and associated with the permanent card. Once created, this number can be used by the user for shopping online.

Another useful fact in terms of security is that the virtual credit card number cannot be traced until the cardholder's identity or actual credit card is identified. This measure also prevents theft of personal information and its possible misuse.

Here are some more important features of virtual credit cards with respect to security:

  • Customers have a minimum and maximum credit limit per transaction each day.
  • Virtual credit cards are valid only for a certain time period, identified by the card issuer itself.
  • Users can usually send money using one credit number (one virtual credit card).
  • The credit balance can be used both in parts and in whole. However, after the payment is made, the number becomes inactive, therefore useless for potential thieves.
  • You can block your virtual credit card instantly online.
  • The remaining balance on a virtual credit card can be credited back to the customer's actual account.
  • Virtual credit cards are easier for the owners to control the payment parameters. They just have to set certain restrictions when using a unique credit number.
  • Virtual credit cards are subject to Payment Card Industry Data Security Standard (PCI DSS)

The conclusion?

An increasing number of people are discovering the benefits of virtual credit cards. They are convenient especially because of the high online security they provide. In fact, it is more secure to shop online with a virtual credit card than with your real one. Unlike the physical credit card, which number remains active and endangered to be "stolen" if you are an inattentive buyer, the virtual one can not track and assign your personal data. In fact, it is almost impossible to make copies of virtual credit cards.

Virtual credit cards are valuable tools that not only simplify payment processes, but create new efficiencies for businesses. On top, they also eliminate numerous security and fraud issues. They protect data privacy and security without compromising your convenience and ease of use.

Boris Angelov - Principal Product Manager at Payhawk - the spend management solution of tomorrow.
Boris Angelov
Principal Product Manager

Boris has a diverse product background from launching finance products to bringing payment programs to life. He is currently leading the Spend Controls product area focusing on enterprise features that bring visibility and control to finance teams.

See all articles by Boris →
Jun 22, 2024


Jun 22, 2024


Jun 22, 2024