For many consumers, buying online is still a source of hesitation or inconvenience. And that is mostly because on some occasions, we will have to provide the data of our current account or our card. To minimize risk, banks and other financial institutions have launched virtual cards. So what differentiates them from traditional credit or debit cards? And what are the benefits?
Virtual cards vs classic credit cards
Virtual cards were born precisely for this new – perhaps not so much anymore – habit of buying online. As its name indicates, and unlike traditional cards, they do not have a physical format. And that is, as we will see later, the main difference with respect to prepaid cards. An advantage derived from this is that we cannot lose them.
Of course, even if we do not have that piece of plastic in our wallets, we will have the information that we usually find printed on it: our name, the number, expiration date and the security code. Exactly the same as physical cards. It will be precisely this data that we use in our online transactions.
As there is no card in physical format, we will not be able to pass it through the readers of the physical stores… unless we link this card to payment platforms such as Apple Pay, Google Pay, Stripe, Garmin Pay or similar services.
The key to virtual cards is that we are the ones who manually load funds onto them, so these are limited and easily controlled. In other words, if a person wants to buy an iPhone and its price is 973 euros, it would be necessary to “recharge” this amount into the virtual card in order to carry out the transaction. That would be the maximum amount of money the user can spend, not even one euro more since these cards do not work on credit.
As they are also not directly linked to our financial products or bank accounts, if the card is stolen, they would only be able to access the funds recharged for your latest purchase.
These virtual cards, designed to use for online purchasing, are also managed through the Internet so that recharges of funds and other operations take effect immediately.
What to consider when choosing a virtual card
As with any other financial product that is acquired, it is essential to know in advance what expenses are derived from having a virtual card. That is, the cost of contracting, maintenance and if there are commissions for carrying out banking operations.
However, it is worth asking your personal bank, as on some occasions they can offer us virtual or prepaid cards with good conditions derived from our status as existing customers.
Among the options, we find some whose issuance and maintenance are free and others that charge for it. Likewise, there are also virtual cards that do not charge to recharge them.
Since we are going to use it to make purchases, it is important to know what the funds limit is and if there is a minimum deposit to make. And if the idea is to spend money abroad, we will also need to pay attention to whether there are taxes on the currency exchange.
If we are interested in linking it to a payment platform to use it in physical stores with our mobile or watch, we must also verify if it is compatible. Another option if we want to pay in stores in person is to opt for the prepaid card modality.
As with any other card, it is worth taking a look at the level of protection they offer: sending SMS, coverage against fraud, insurance, etc., something that we usually find by reading the fine print of the contract.
When choosing a virtual (or prepaid) card, we will essentially find products that come from traditional banking entities and fintech companies in the form of mobile banks that cover the classic functions to a greater or lesser extent.