Are virtual credit cards safe? How they enhance security

Running a business often means making frequent online purchases, whether for software, supplies, or services. But every time you enter your credit card information, you run the risk of fraud or misuse.

Virtual credit cards solve this problem by generating unique, temporary numbers that protect your company’s actual account details, giving you more control over spending and security.

What are virtual credit cards?

A virtual credit card is a unique, digital-only credit card with a temporary number, expiration date, and card verification value (CVV) that are distinct from those on your physical card. Virtual cards add an extra layer of security between merchants and your actual credit card information when making online payments, which helps protect you against data breaches and credit card fraud.

Many major banks, credit card providers, and fintech companies offer virtual cards via online platforms. You can easily spin up multiple virtual card numbers and set rules around spending limits where they can be used. You also have the option to lock or delete virtual cards at any point without impacting your real credit card account.

You can’t use virtual cards for all purchases; they’re generally intended for online or phone transactions. However, you can add virtual cards to mobile payment services and digital wallets such as Apple Pay, Samsung Pay, or Google Pay, allowing you to use them at physical stores that support contactless payment.

How do virtual credit cards work?

Virtual credit cards are tied to your actual credit account, but instead of sharing your permanent card number, they have a unique, temporary number for making online purchases.

This number usually comes with its own expiration date and CVV, making it harder for fraudsters to misuse. Since they connect back to your main account, charges made on a virtual card appear on the same statement as your physical card, but with an added layer of control and security.

Steps to generate and use a virtual credit card

Here’s a simple step-by-step look at how to request, set up, and start using a virtual credit card for your business purchases:

1. Access your provider’s platform: Log in to your credit card provider’s website or mobile app
2. Create a virtual card: Request a new virtual card number
3. Set controls: Apply spending limits or restrict the card to certain merchants if the option is available
4. Copy the details: Use the virtual card’s number, expiration date, and CVV just as you would with a physical card
5. Make payments: Enter the details at checkout for online bill pay or shopping
6. Monitor and manage: Track transactions in your account dashboard, and lock or delete the card when it’s no longer needed

Are virtual cards safer than physical cards?

Yes, virtual cards are typically safer than physical cards because they create a buffer between merchants and your real credit card account information. This helps limit the impact of data breaches and protects against fraud and misuse.

You can set unique spending limits per virtual card or restrict them to purchases only from specific merchants. They can also be configured for one-time use, automatically deactivating after the first transaction. These rules offer extra fraud protection compared to a regular business credit card.

Unlike physical credit cards, virtual cards guard against theft or loss. You're vulnerable to fraud if you carry a physical credit card and someone steals it. Virtual cards live in your digital wallet, keeping you safe from fraudsters.

They also reduce risk in the event of a data breach. If someone compromises a merchant’s systems, they’ll access only your temporary virtual card number, not your real account details. And like all credit cards, virtual cards must comply with the Payment Card Industry Data Security Standard (PCI DSS), which safeguards transactions and cardholder account information.

Benefits of using a virtual credit card

Virtual credit cards aren’t just a security upgrade; they also give you more flexibility and control over how you pay. From managing subscriptions to setting spending limits, they offer practical advantages for both personal and business use:

• Enhanced security and privacy: Your real credit card number stays hidden during transactions, reducing the chance of exposure to fraud
• Spending control: Set custom spending limits or restrict cards to specific merchants for greater oversight than a physical card allows
• Multiple cards, multiple uses: Generate separate cards for different vendors, subscriptions, or business departments without affecting your main account
• Easier subscription management: Assign virtual cards to recurring payments. If you ever want to cancel, simply delete the card instead of contacting the merchant.
• Fraud prevention: Temporary numbers and usage restrictions make unauthorized charges far less likely
• Instant setup and use: You can generate and use virtual cards immediately for online purchases and contactless payments
• Personal and business flexibility: Whether you’re managing personal subscriptions or company expenses, virtual cards provide an added layer of security and control

Potential drawbacks of virtual credit cards

Virtual credit cards offer strong security and flexibility, but they aren’t without limitations. Here are some potential drawbacks to keep in mind:

• Can’t always use them in-store: Not all stores offer contactless payments such as Google Pay or Apple Pay. While virtual cards are ideal for online shopping, you may have fewer choices when it comes to in-store retailers.
• Refunds may be complicated: Each store has its own policies, and some may only offer refunds through the initial payment method. This could be an issue if you used a virtual credit card number that’s now inactive. In this case, you might receive store credit, a check, or a gift card instead.
• Not ideal for reservations: When you make a hotel reservation with a virtual card, it can be difficult to match your payment method during check-in. Hotels typically require a physical card upon arrival, so using a virtual card may require additional confirmation, such as contacting your bank.
• Possible fees or restrictions: Some providers may charge fees or place limits on how you can use their virtual cards, so it’s worth checking the fine print before signing up
• Managing multiple cards: Generating several virtual cards for subscriptions, vendors, or employees can lead to confusion without a clear system

How to choose a virtual credit card provider

When choosing a virtual credit card provider, consider potential fees, usage limits, and eligibility requirements, since these vary by provider. It’s also worth checking whether the cards integrate with digital wallets for in-store use, and how easy the platform makes it to manage or cancel cards.

Several financial institutions offer virtual credit card numbers for added security when shopping online:

Notably, Chase doesn’t currently offer virtual credit card numbers for its consumer credit cards. However, Chase cardholders can use digital wallets such as Apple Pay or Google Pay for more secure transactions.

Other ways to protect your information when shopping online

Here are some additional methods you can consider to keep your business card information safe at online checkouts:

• Use secure connections: Make sure your internet connection is secure by looking for https:// in the URL and a padlock icon in the address bar before entering any personal information. This indicates that the website is using a secure connection to encrypt your payment information.
• Use a credit card: Credit cards offer better fraud protection compared to debit cards. In the case of unauthorized transactions, credit card issuers generally provide more robust dispute resolution processes and limit your liability.
• Enable two-factor authentication: Many online retailers offer multi-factor authentication (MFA), which adds an extra layer of protection by requiring a second form of verification in addition to a password. This could be a text message, email, or an authentication app.

Create unlimited virtual cards with Ramp

At Ramp, we provide unlimited physical and virtual corporate cards that empower your employees to spend while allowing you to enforce your company’s expense policy. With the Ramp Business Credit Card, you get unlimited physical and virtual corporate cards that run on the Visa network. They're accepted in 200+ countries and are compatible with Apple Pay and Google Pay.

Our cards come with built-in spend management features, so you can easily assign virtual cards and create custom guidelines for use. Add restrictions to automatically prevent out-of-policy spend, flag questionable vendors for approval, and simplify approvals with personalized workflows that notify only the right people.

Add more security to your business expense management with Ramp's virtual corporate cards.