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What is a virtual credit card



A number of banks and payment systems offer potential customers a relatively new product – a virtual credit card. Such cards are not an alternative to “classic” plastic cards. Rather it is an additional payment instrument to the client’s main card.

First virtual cards were issued as a debit card, i.e. a user could get a virtual card only for use of his/her own funds. Later, cards with a credit limit and a grace period became available, just like a regular credit card.

Virtual cards – what are they

The main difference from the standard bank card is the lack of a physical carrier. After registration the user receives only the card details: number, holder data, cvc2/cvv2 codes, expiration date. This information is enough to make purchases in any online stores and online marketplaces.

Due to the lack of a physical carrier, such cards do not provide for a pin-code. The card is registered in the bank’s database and is valid for online purchases only. Most virtual cards have the following limitations

  • It cannot be used off-line; you will not be able to pay with the card in a regular store.
  • No cash withdrawal operations available – even if you have a credit limit, you can’t withdraw cash from such a card.
  • No possibility of making transfers.
  • The card may not be used to pay for services, refill mobile telephone balance.
  • Relatively short period of validity up to 1 year.

Some cards allow making transfers but only at own expense. Credit limit may be used for online shopping only. The bank provides the user with the card details with which they can use the product in accordance with the terms of the user agreement.

How to use the virtual card

The mechanism of use and operation of this type of card is almost no different from the standard one. The client applies to the bank for a virtual credit card. The bank considers the application and approves the issue of a card with a certain limit.

After activation, the holder can visit any online store and make the necessary purchases. Regardless of the name of the store and the category of goods purchased, the mechanism of shopping is always identical, even when using the most common credit card. It consists of the following steps:

  • The card details fields are filled in – number, holder data, cvc2/cvv2 codes, validity period are specified.
  • Consent to the transaction is given.
  • The purchase is activated.

Even when using a virtual card the process of making purchases is always the same. When using a regular credit card, the same information is given. Owners of virtual cards do not have any inconveniences when making purchases.

Any transactions on virtual cards are always confirmed by entering a password. When making a purchase at an online store, the system will prompt to enter a verification code. This code is sent by the bank to the linked phone number. After entering the code the purchase is made and a certain amount of money is deducted from the balance.

If the card is issued with a credit limit, in most cases there is a grace period of 50-55 days. During this grace period the user spends money on the card account and thus does not have to pay interest to the bank. Cardholders have long been familiar with this scheme of using credit limit.

Grace period, credit limit, interest

Similarly to the standard credit cards, the terms and conditions are specified in the range provided by the bank and approved individually for each client. The grace period can be up to 55 days – at the discretion of the bank.

The credit limit on most cards does not exceed $2,000. Some major banks have launched virtual credit cards with a possible credit limit as high as $5,000.

Interest rates are almost the same as those for standard cards. At the initial stage is set rate of 20-29% (general rate), which can be reduced with proper use of the card.

How to refill a virtual card

Formation and use of such cards is provided only in the online mode. Therefore, the main options of recharging the card are remote. One can transfer money to the virtual card account via Internet Banking system for any credit/debit card in a few clicks. It is enough to specify the number of the transfer recipient card.

If the card is issued by credit organization, you can replenish its account by cash through the bank cash desk. For some products, you can deposit money from your cell phone balance.