Virtual Credit Cards Explained: Features, Benefits, and Application

A virtual credit card is an intangible form of credit, existing solely online, with all its details accessible on the user’s banking profile. Some banks offer this feature of Virtual Credit Card as an add-on feature, which makes it extremely convenient to shop online. A virtual credit card produces a unique, temporary card number for each purchase, shielding the user from potential fraud. They have high-security features and can be easily customized for different types of usages, providing users greater control over their online spending habits and an additional layer of protection.

Virtual credit cards are extremely useful for people who want to safeguard their financial information and make dozens of daily online transactions. You can easily manage this card via the bank’s application or website, helping you set spending limits and extend expiration dates. Some services also allow users to instantly delete or regenerate virtual cards, providing flexibility and peace of mind.

Features of a Virtual Credit Card

Here are some of the important features of a virtual credit card that will help you decide whether you want to apply for the same:

Unique Virtual Credit Card for Every Transaction

Virtual Credit Cards often generate unique card numbers for each transaction, eliminating potential fraud risk. However, these numbers are only valid for a single use, meaning no one can take your funds without your permission.

Easy Customisable Spending Limit

Since a new card number is produced every time for different transactions, one can easily alter the spending limits daily and avoid overspending. This feature helps manage budgets and rejects transactions exceeding the set limit.

Merchant-Specific Cards

Some Indian virtual credit cards can only be used with specific merchants, meaning they will only work on certain purchases from a retailer. This feature adds another layer of security by ensuring that even if anybody steals the number, they cannot use it elsewhere.

Instant Generation

Unlike traditional credit cards, which depend on bank loan approval processes,  banks or financial institutions produce virtual credit cards instantly. Thus, instant virtual credit cards provide quick and easy access to secure payment methods without waiting for a physical card to arrive.

Global Acceptance

A virtual credit card is globally accepted. However, specific store owners can deny using credit cards as a means of payment. This feature ensures that users can make secure purchases from various merchants worldwide.

Different Types of Virtual Credit Cards

Here are the different types of virtual credit cards that banks design to meet the various needs of applicants with varying levels of security and convenience:

Single-Use Virtual Credit Card

A single-use virtual credit card is well-suited for transactions requiring maximum security, such as when purchasing from a new or unfamiliar online retailer. Financial institutions generate a unique card number that customers can use only once. The card number becomes invalid after the transaction.

Merchant-Locked Virtual Credit Card

A merchant-locked credit card is a card banks assign a unique number that the customer can only use with a specific merchant. This restriction prevents unauthorized transactions, protecting the card owner from potential fraud. Companies often use this feature to manage customer subscriptions securely.

Prepaid Virtual Credit Card

A prepaid virtual credit card is preloaded with a set amount of money and is usable only until the card has some balance. It is suitable for people who face a tough time budgeting but also want to take advantage of features that come with a credit card.

Business Virtual Credit Card

A business virtual credit card is useful for companies that manage employee spending while maintaining control and oversight. These cards are issued to employees for business-related expenses, helping with business-related expenses and maintaining merchant restrictions.

How to Apply for a Virtual Credit Card

Applying for a virtual credit card in India is an extremely straightforward process. Customers can use it easily through their bank or credit card issuer’s website or mobile app. Here’s a step-by-step guide on how to apply for a virtual credit card:

• Check Eligibility – Many banks have certain eligibility requirements for a virtual credit card application. Ensure that you fit into them before submitting your application form. If you don’t have a credit card, you can first apply for a traditional one with the bank and then take the add-on feature of a virtual one.

• Filling Out The Application Form—Go to your respective bank’s website or mobile app and log in using your credentials. Then, click the Virtual Credit Card button and fill out the application form. You might have to provide information about your expected spending limit and desired expiration date. Finally, click confirm, and the screen will display your card details.

• Start Using Your Card – Your virtual credit card will stay active on your online banking portal, and you can easily purchase any product using it. Depending on the expiration settings, you may need to generate a new virtual card for future transactions, but until then, you can easily modify the bank’s credit card limit.

How To Choose A Virtual Credit Card Provider

You can consider the following factors while picking your preferred virtual credit card provider that meets all of your needs and offers you the desired security and convenience:

Pre-existing relationships

Many major banks and financial institutions provide free virtual credit card services. If you already have an account with a particular bank account, you should try to apply for the same in the same institution. This way, the bank will integrate your credit card finances into your existing bank account.

Examine Security Features

It is essential that your chosen financial institution offers robust security features and helps you set up spending limits, expiration dates, and merchant-specific restrictions. You can also check if the bank generates new cards per transaction, which will further help you add extra protection against fraud.

Check The Acceptance Status of The Card

You must ensure that the chosen credit card is widely accepted by merchants, especially if you shop internationally. Some virtual cards might have limitations, so confirming that the provider supports your preferred online retailers and services is important.

Check the Reviews of the Card

Reviewing existing users is helpful before applying for a virtual credit card. User experiences can provide valuable insights into what to expect from a particular provider.

Uses of Virtual Credit Card

Here are some of the services and products that you can purchase using a virtual credit card:

• Online Shopping
• Online Subscription Payments
• One-time purchase for online retailers
• Specific Merchant-related Credit Cards
• Travel Booking
• Gift Cards
• International Purchases
• Business Expenses

Benefits of Virtual Credit Card

Here are some advantages of using a virtual credit card than a traditional one:

Ease of Usage

A virtual credit card can be easily used via mobile apps or online accounts, making it easy to shop anytime. They can also be deactivated when needed, providing flexibility and control over spending.

Protection From Fraud

Virtual credit cards cannot be physically stolen, and there are multiple built-in fraud detection and prevention tools, so you don’t have to fear unauthorized transactions.

Streamlined Financial Management

Virtual Credit Cards can be easily tracked and managed using any digital platform, helping people manage their finances more efficiently. This is particularly beneficial for businesses, which can use virtual card apps to track employee expenditures and manage corporate spending.

Customizable Cards

Applicants can set spending and expiration date limits on their respective credit cards, which helps people manage their spending and budgets better. This feature also enhances security by capping the amount charged to a card, reducing the risk of fraud.