Virtual Credit Cards: What You Need to Know
If shopping online makes you concerned about handing over your credit card information, a virtual credit card may provide the extra layer of security you’re looking for.
A virtual credit card is a temporary or alternate credit card number that allows you to transact without providing your actual credit card number.
With a virtual credit card, there’s less risk of your credit card information falling into the wrong hands.
» MORE: How credit cards work in Canada
What is a virtual credit card?
BACK TO TOPA virtual credit card is not a physical card. Rather, it’s a randomly generated card number that is tied to an existing payment account. Virtual credit cards are designed to be used when you’re shopping online or over the phone.
A virtual credit card number is different from simply adding your physical card to a digital wallet, though both can help keep your actual card number from being shared with merchants. A digital wallet typically uses a tokenized version of your card, while a virtual credit card number is a separate card number linked to your account.
» MORE: How to maximize your use of credit card points
How do virtual credit cards work?
BACK TO TOPVirtual credit cards are often issued for one-time use, but some can be used multiple times. Some virtual cards can be added to a digital wallet via Apple Pay, Google Pay or Samsung Pay, depending on your smartphone, card issuer and the type of virtual card.
You use a virtual card the same way you’d use a regular credit card when completing any card-not-present transaction (a payment where the physical card isn’t tapped, inserted or swiped): by entering the typically 16-digit number, the expiry date and the CVV number.
Virtual credit cards can’t prevent every instance of fraud, but if your virtual card number is compromised, they can limit the fallout in two important ways:
The virtual card does not reveal your original credit card number.
You can cancel the virtual card immediately without closing your account.
Pros and cons of virtual credit cards
BACK TO TOPPros
- A virtual credit card helps protect your actual credit card number from being exposed.
- Getting a virtual credit card may be as simple as requesting the temporary number.
- Issuers may allow you to set a specific spending limit and expiry date for each virtual card.
- Some virtual cards may be available almost immediately after approval or account opening, which can be helpful if you need to make an online purchase before a physical card arrives.
Cons
- Returns and refunds can be complicated because your virtual number won't match your everyday card number.
- Car and hotel reservations made with a virtual credit card number can lead to headaches when checking in using your permanent credit card number.
- A virtual card does not automatically cancel subscriptions or free trials. You’ll still need to follow the merchant’s cancellation terms to avoid unwanted charges.
- Some merchants may not accept virtual cards, especially for certain subscriptions, reservations or purchases that require the same card to be presented later.
How to get a virtual credit card in Canada
BACK TO TOPIf you’d like to use a virtual credit card for your next online purchase, check with the financial institution that issued your existing credit card or cards. Availability varies by issuer, card type and digital wallet.
Ask about options to generate virtual card numbers, especially the ability to self-serve via your existing online account or mobile banking app.
You may also be able to turn on or access a virtual card number through a supported browser, digital wallet or checkout tool, depending on your card and issuer.
If virtual cards aren’t available through your current issuer, or you don’t yet have a credit card, this is an important feature to consider when comparing the best credit cards in Canada. Issuers will often include details about virtual cards in their list of features and benefits. If not, contact them directly to inquire about it.
Some issuers, payment networks and fintechs, like Neo Financial and KOHO, also support virtual debit or prepaid card functionality. For example, some virtual debit and prepaid cards can be used online, over the phone or through a mobile wallet, depending on the product.
What about instant approval?
If you’re looking for an instant virtual card, read the fine print carefully. “Instant approval” usually means you may receive an application decision quickly; it does not guarantee approval or instant access to a usable card number. Some instant virtual cards are also prepaid or debit cards, not credit cards.
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Frequently asked questions
Who should get a virtual credit card?
If you make one-time purchases often or are just looking for a more private way to shop online, a virtual credit card might be worth considering.
Are virtual credit cards legitimate?
Yes. Virtual credit card numbers are randomly generated by financial institutions and are often only valid for a short period of time. For those who shop online, they provide an extra layer of protection against fraud, such as in the event of a data breach or hack.
Where can I use a virtual credit card?
Virtual credit cards can be used in many card-not-present transactions, such as when buying something online, making a bill payment over the phone, or placing a mail-order purchase.
Is a virtual card the same as a card in a digital wallet?
Not exactly. When you add a card to a digital wallet, the wallet typically creates a tokenized version of your existing card. A virtual credit card number is usually a separate card number linked to your account that you can use for online, in-app or over-the-phone purchases.
Can I get a virtual credit card online?
Yes, depending on your issuer. Existing cardholders may be able to request, generate or turn on a virtual credit card number through online banking, a mobile app, a supported digital wallet or a browser checkout feature. New applicants may also be able to apply online for a card that offers instant approval or instant virtual card access, but approval and availability are not guaranteed.
Can I use a virtual card for free trials?
Yes, if the merchant accepts it. A virtual card can help keep your real card number private and may give you more control if your issuer allows you to set spending limits, expiry dates or lock the card.
But using a virtual card for a free trial does not cancel the trial for you. Before signing up, read the terms and conditions, note the cancellation deadline, keep confirmation emails or screenshots, and monitor your statement for unexpected charges.
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Shannon Terrell