In today’s world, more and more people are embracing virtual payment for goods and services.
Based on public views mere decades ago, this switch seems unprecedented.
A deep distrust of information safe online and even some outdated views on credit cards themselves make it surprising that virtual payment has shifted to the widely accepted juggernaut it’s become.
However, over the past few years, greater security protocols have made virtual payment the preferred method for protecting sensitive data.
Let’s take a look at some of the ways the public perception has changed, and also visit some scenarios in which virtual payments can be the best way to pay.
A cultural shift has taken place as Millennials move into a more key spending demographic.
Coming of age alongside computers, they are well-suited to virtual payment.
They understand the level of security offered by today’s virtual payments and value convenience and speed over personal interaction.
Studies show that 60% of Millennials don’t even own a credit card.
Gen X has bought in as well.
A study by the Federal Reserve System found that electronic payments are over ⅔ of all non-cash payments and that 64 million households are paying at least one of their bills online.
Huge systems like Apple Pay and PayPal make virtual payments easier and more secure than ever before.
What Exactly is a Virtual Credit Card?
The name virtual payment card can be slightly misleading.
It isn’t separate from a traditional credit card account, but a free add-on to an existing credit account that offers increased safety.
A virtual credit card masks a consumer’s credit information by the creation of a proxy card number unique to the transaction, as well as an expiration date.
A user can create any number of virtual card numbers without harming their credit score, or negatively impacting themselves in any way.
Convenience and Safety for Online Purchasing
This shift in the public’s collective thinking actually makes sense when you break down the safety benefits of virtual payment.
The use of virtual credit cards slashes cases of fraud, as would-be criminals don’t gain much if they steal the information.
Virtual credit cards are issued either as a separate number for each merchant or as a single number that can be changed by the holder at any time.
The impermanence of these numbers makes theft a losing game.
Eliminating Issues in Business Travel
Using the company credit card for business travel is moving toward becoming obsolete.
With plastic, there are too many opportunities for fraud.
With business travel too, you add the issues of policy compliance and expense reports.
For companies, most problems with business travel can be eliminated with virtual pay.
Almost half of all credit card fraud was from “card not present” transactions.
With a single-use, encrypted number that is assigned to a single transaction to a single vendor, this kind of fraud becomes virtually nonexistent.
The use of virtual credit cards also ensures employee compliance with company spending.
An assigned corporate credit card can be used at will by the employee.
This creates necessary audits to match transactions to each payment.
This adds up to a lot of wasted hours when you have a company with a large travel contingent.
Virtual payments are automatically matched to each transaction, eliminating this step.
The use of virtual credit cards to make transactions for business travel can keep money safe, and save money for the company as well.
How to Use a Virtual Credit Card
A virtual credit card can be used for any online site or transaction.
You can’t use a virtual credit card for brick-and-mortar retailers, as you need a card to be scanned.
Other situations are a little trickier and need to be navigated on a case-by-case basis.
Some things like a hotel room or car rental may be paid for with a virtual credit card over the phone, but some companies require an actual card that needs to be scanned when you check-in in person.
In this situation, call ahead to find out if a virtual payment can be accepted.
Another issue you may run into with using a virtual credit card is returned.
Because they use a one-time access number, vendors may be reluctant to grant tender returns.
You may have to accept replacement or store credit rather than cash.
How Do I Get a Virtual Credit Card?
There are a few steps to accessing a virtual credit card, but the good news is, that it’s not difficult to do.
1. Apply for a credit card (if you don’t have one already)
To have access to a virtual credit card, you need to have an existing credit card account.
Virtual credit cards are available with most major card issues (Visa, Amex, Mastercard, Chase, Wells Fargo, Capital One, just to name a few).
Even systems like Apple Pay and PayPal now have virtual credit card options available.
2. Access your account settings
Go online under your credit card account and you’ll find a section for “virtual card numbers”, or search for virtual credit cards.
Your site should pop up with a page that will explain the process.
3. Accept your number (and download the app if necessary)
Your issuer will have directions to follow on the website.
They may have you download an app that is specific to their virtual credit card.
Others may let you access your virtual credit card through their regular banking app.
They will give you a 16-digit number that is generated for you.
4. Decide on an expiration date
You can use the access number for one transaction, or set it up for a recurring expense.
Some issuers will decide the expiration date for you, in cases where different numbers are assigned for different merchants.
You can use your virtual credit card information given to you just as you would use a regular credit card online.
While a virtual credit card is not always feasible (as in cases of brick-and-mortar purchases), they are incredibly safe and convenient in most cases.
And with the majority of businesses shifting to an online model, virtual payments will only become more prolific in the coming years.
Are you looking for a virtual business account for your business?
Open a business account with Statrys today and get access to a multi-currency business account in Hong Kong.