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Virtual credit card numbers: everything you need to know

3 minute read

According to the most recent report from Financial Fraud Action UK, fraud losses on UK cards amounted to £618 million in 2016 – an increase of 9% on the previous year, and the fifth year in a row that had seen an increase in such losses. With credit and debit card fraud continuing to rise, one new measure being introduced in the fight against fraud is the use of virtual credit card numbers. But what are they, and will they actually work?

What are virtual credit card numbers?

Also known as controlled payment numbers, virtual credit card numbers are single- or limited-use credit or debit card numbers that can be used in place of your actual card numbers when you shop online. They’re connected to your account, and they look exactly like real card numbers – the same number of digits as the long number across the front of your card, plus the expiry date and three-digit security code.

Typically, these numbers can be used just once (or a limited number of times) before they expire. To get a virtual credit card number to complete an online purchase, you generally have to log into your credit card account online and use a tool that generates a new number for you. Only a handful of providers have implemented virtual credit card numbers so far, and among the ones that have, there are a few different features; some allow you to put a spending limit on the number, for example, while others only allow a number to be used with one particular retailer.

Using a virtual credit or debit card number means that the online retailer will process the set of temporary numbers rather than the real ones, preventing rogue sites from gathering your actual card details. If you’re shopping on less well-known websites, this should give you some peace of mind that if the site did turn out not to be legitimate, your credit card details wouldn’t have fallen into the wrong hands.

Will this really stop card fraud?

While virtual credit and debit card numbers are a big step in the right direction in the battle against online fraud, they’re not without their limitations. The obvious problem with virtual credit and debit card numbers is that they can only be used online, while e-commerce fraud only accounts for around half of all card fraud. As the loss, theft or cloning of physical cards continues to be a major source of card fraud, this means this particular anti-fraud measure will only be tackling part of the problem. (Incidentally, if you’re wary of using your physical card in a real-life shop, services like Apple Pay are a much more secure alternative.)

Virtual credit card numbers aren’t a substitute for continuing to be careful with keeping your account details secure, as they wouldn’t prevent you being put at risk of fraud by so-called impersonation scams, whereby fraudsters trick consumers into handing over card details by pretending to be a well-known business, bank or other organisation. Nor would they stop criminals getting hold of your credit card details through phishing or malware, methods that gain access to your online accounts, such as bank accounts.

Theoretically, unless you use a different virtual card number each time, you’re still at risk of fraud. A criminal could still use the virtual number before it expired if you’re using the same number more than once. This need for single-use numbers means that from a customer experience perspective, using a virtual credit card number is clearly less convenient; rather than saving your card details in online shopping accounts, they have to be inputted manually each time. However, if you were to suffer credit card fraud via your physical card, you at least wouldn’t have to go through all your online shopping accounts updating the details.

Finally, for small online retailers, virtual credit cards shouldn’t have any day-to-day practical implications, but what they do show is that customers are increasingly concerned about online fraud. Doing what you can to reassure them – using a secure payment system, for example, and ensuring your website looks professional and trustworthy – will help instil the confidence your customers need to shop with you.

Zoe works as a Content Marketing Executive at the UK Domain. Previously working in advertising and the sporting industry, Zoe has over four years experience in marketing.

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