Virtual Credit Cards – a safe payment solution

Though online payments have become popular over the years since its inception, many people are still skeptical to use it as they have to give out their card details, including the CVV number for almost all online transactions. The rise in internet security problems add to the customers’ insecurity as it becomes difficult to judge the credibility of some sites. In order to tackle this crucial problem and gain the trust of customers so that they can enjoy tension-free online shopping, some banks have introduced virtual credit cards. They are online cards issued for a limited period of time so that customers can make online payments using the same, without using the actual card details. Currently, this free service is offered by the following banks in India:

• SBI (SBI Virtual card)
• ICICI (ICICI Virtual credit card)
• Axis Bank (e-wallet card)
• HDFC (NetSafe)
• Kotak (netc@rD)

In China, ecommerce giant Alibaba has announced its collaboration with China’s CITIC Bank to issue virtual credit cards to enable more online transactions from customers. Initially, 1 million virtual credit cards will be issued and the approval of cards will be based on the online shopping histories of applicants. Credit limit will vary depending on the applicant’s online shopping pattern. Approved cardholders will be able to use them only on ecommerce platforms accepting CITIC credit cards.

Getting a Virtual Credit Card

Although the service is named differently by the various banks, the principle and the procedure (broadly) is the same:

• Credit card holders should sign in to their net banking facility and provide the credit card details
• Bank creates the virtual credit card and provides the details – 16-digit card number, expiry date and CVV number, which user can then use for online transactions
• One can top up with as much amount as is needed to make an online payment and the same will be credited by the bank from account.

Debit card holders can also create virtual cards, in which case the amount is debited from the person’s savings bank account.

Features of a Virtual Credit Card

• Maximum validity of 48 hours, following which any remaining amount will be credited back to account.
• One time transaction only, using the full amount or part of it. Once used, any balance amount will be credited back to account.
•  Minimum credit limit of Re 1, maximum limit depends on the transaction limit on the primary card.

Though virtual credit cards were introduced as an answer to internet fraud, the facility has not taken off or been used as extensively as expected because customers are either not aware of the existence of this facility or not aware of the benefits/uses of it. Once known and accepted, it is sure to become more popular and more extensively preferred.

How can Indian sellers benefit from Virtual Cards facility

Though the credit and debit cards have penetrated into more sections of society now, a lot of customers are skeptical and insecure about using their credit or debit cards for online transactions. The rising numbers of internet fraud and security concerns make customers more reluctant and they prefer avoiding a purchase which affects the conversion rates for a seller. Online sellers can thus tap into the customer segment which is insecure about online transactions by offering this safe payment option and encouraging the customers to make use of the virtual credit card facility offered by banks, to ensure customer retention and higher conversion rates. Along with offering the option, sellers will also have to educate the customers about the benefits of such virtual cards which are a perfect solution to online shopping without compromising the security of the user’s card or account. They are controlled by the user and at no point are the actual card details given, as the virtual card forms a wall between the user’s account and the transaction.