Almost all banking and financial services are taking the digital transformation route to become completely online. Identifying the source and destination of funds along with confirming the identities of fund receiver and sender has become paramount to prevent illegal activities and enforce regulatory discipline.

Disadvantages of Physical credit card

The traditional credit card has been a major victim of many misuses, scams, and frauds owing to its physical nature since it is required to be carried around for transacting with or without a personal identification number or PIN. Loss of card is a big headache for the issuer and the user to report, block, or track misuse.

Introduction to Virtual Credit Card

VCC is just like a physical credit card, but without the functionality to swipe the magnetic strip or scan the chip on a point of sale or POS device. User can define or set own limit before buying the card and using it.

VCC comes with a unique set of the card number, PIN, and verification value or CVV. Entirely online, digital, and or OTP dependent, it can be accessed only when required. VCC becomes relevant and useful for one or a few important transactions only.

Once its validity is over the VCC destroys itself, leaving behind some transaction details only for the purposes of time stamping or audit trail.

How to get a VCC and use it

VCC is generated instantly by logging into the card issuer’s secure website and using a one time password or OTP. It is valid for a limited and fixed period of time, such as 24 hours, less, or more depending on the user’s need, card issuer’s policy, or both.

Through OTP received on mobile, QR code, or any other mode of authentication as set by the card issuer, user can conveniently transact on a VCC.

Benefits and drawbacks

• Ease of use: Access and use VCC on a smartphone or other devices once generated.
• Short validity: Temporary nature of VCC reduces spending and risk of misuses.
• A unique set of one-time characters: Security and privacy of the user are enhanced in terms of making the card relevant for only one or a few important transactions.
• Fully online and automated: Used for online purchases, VCC identifies users, authorizes the transaction, and authenticates details, all at the same time.
• No storage: No hassles of keeping or carrying VCC and no physical purchases.
• Prepaid nature and predefined limit: Prevents overuse or fraud.
• Tracking convenience: Key details of transaction are recorded online, making it easy for users and issuer to keep track of expenses and dues.
• Self-destructive capability: Prevents misuse or user falling prey to financial risks. Barring key details, other data is deleted permanently and the card is not reusable.
• No problem with loss of card: VCC can be freshly generated always.

Currently known drawbacks of the VCC are very few, such as it is not as easy to use as a mobile wallet, it cannot be run on a physical POS device, and it does not come with cash withdrawal benefits that are traditionally offered by physical cards.

Conclusion

Frequent cybercrimes such as cheating, stealing, money laundering, and what not have led to a decline in the preferability of the physical card.

Hence, at a time when almost every other financial service has gone online, VCC surpasses expectations in ways beyond imagination, even for a layman user.

One potential drawback could be the possibility of continuous and uncontrolled generation of VCC, even by genuine and authentic users. It could be misused by them or make them prone to unwanted financial liabilities.