The New Era Of Cashless Banking The “Virtual Credit Cards”

Summary

1. Virtual credit card (VCC) is a one-time usable card which comes with a preloaded amount i.e. the credit limit that is valid only for a specified time period.
2. It has no plastic / physical existence and is created for online transactions only.
3. A Customer can make only one payment with the virtual card in which he can use all the credited balance or a part of it.
4. VCC is a no cost free card issued by the banks. It has no fees.
5. The benefits of VCC are restricted to the primary cardholders only. VCC is not available for secondary cardholders.
6. A VCC is available for non-credit card holders as well.

With the increasing number of cyber crime especially that with the credit-card frauds and cloning, the Virtual Credit Card was introduced for the safety of the credit-card users transacting online using their credit-cards. A virtual credit card – VCC is an electronic card which has no plastic or physical existence and is created for carrying out online transactions only. It is a free service offered by banks to customers who wish to make an online payment using their credit cards. VCC can be created by using the bank’s internet banking facility, by providing one’s credit or debit card details without paying any charge.

A VCC is like an add-on credit card issued on the primary credit card. All relevant details viz. the card number, the ‘VALID FROM’ date, the expiry date and the CVV number are visible online. Each virtual card comes with its own card number, CVV number and validity details which can be used for online transactions just like regular credit cards. However important here is to note that – VCC is meant for one time use only. For each online transaction the new VCC is created and is valid for a maximum time period of 48 hours. The credit limit and the validity period may vary from bank to bank. A Customer can make only one payment with one virtual card wherein he can utilize all his credit balance or use only a part of it. If there is any balance amount left on the card, it will be credited back to the customer’s account.

A majority of leading banks namely, ICICI Bank, HDFC Bank, Kotak Bank, SBI, Axis Bank, etc. are offering the facility of virtual credit card for its users.

Unlike the add-on card facility on the credit cards, the virtual cards are not available for the add-on card or secondary credit card holder. The benefits of VCC are restricted only to the primary cardholder only. However to get a virtual credit card the customer need not mandatory be a basic credit-card holder. A virtual credit card can be available to the non-credit-card holders as well. Debit card holders can also easily apply for a virtual credit card. In their case, the VCC will be linked to their debit card or the bank account.

Hence it is concluded that a virtual credit card allows secure online transactions as it reduces the risk of exposing the underlying credit card details to the vendor. It proves helpful when:

• Many vendors websites are automated which saves the customers card details with its CVV no.
• Many websites do not have an option to opt out for non-saving of the cards details.
• Few service provider websites uses and saves the card details for auto renewal of its services.
• Few websites accept payments through credit-cards only.