Virtual Credit Card – An Introduction

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Though Malaysian banks do not readily offer this service yet, cardholders in many countries use a certain financial instrument called the virtual credit card to make online purchases without revealing their card details over the Internet. If you are interested to educate yourself on this very nifty financial service, read on.

What is it?

Despite the name, it is really not a card, but a set of numbers that is generated by a financial service provider to enable a consumer to make online purchases (very much like a credit card). It is also known as “Controlled Payment Numbers”.

Akin to a credit card, it comes with a credit limit, and is usually accompanied by an expiration date. Depending on choices offered by the financial entity and options taken by the user, a virtual credit card may work for multiple transactions or may expire with only one single use. Most of the time, it is generated to be used with one merchant and for one specific purchase only.

Why would people opt to use it?

It is seen by many as an excellent method to reduce the potential of credit card fraud for many reasons. These are the two key ones:

– It is usually created to be used for a specific purchase, of a specific value, with a specific merchant. Technically, it is highly unlikely that it can be used to make any other form of purchases even if the details are stolen.

– Even for virtual credit cards with multiple-transaction facility, the small spending limits (compared to a conventional credit instrument where the credit limit can be anything from RM3,000 all the way to RM18,000 or more) mean the potential financial damage is much smaller in the event of fraud.

How to apply for one?

For those who live in countries with banks that offer virtual credit cards, the application process differs from provider to provider but generally involves:

Signing up for the service with a bank
Downloading a security software provided by the bank
And subsequently using the said software to generate a new controlled payment numbers for every new purchase

As an alternative to using banks, some people also use preloaded virtual credit cards offered by online entities (such as Entropay) to make online payments. With preloaded ones, funds are first loaded into a card directly from an authenticated bank account and credits are subsequently deducted when payments are made using the card. A fee is usually charged by the card provider for each transaction.

Can I get it from a bank in Malaysia?

Unfortunately, there is little indication that this unique credit facility would be offered by banks in Malaysia for consumers any time soon. Global online payment service provider Paypal used to provide a similar service, though it had been discontinued since 2010.

For businesses, a Virtual Card solution for corporations and businesses has been launched by Citibank in six ASEAN countries in June 2013, including Malaysia.