Virtual Credit Card, Safe Online Shopping


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A virtual credit card lets you shop online without having to expose your credit card number to potential thieves.

The best way to protect your credit card number online might be to use a fake one.

Well, it’s not actually fake – it’s “virtual.” Yes, it’s legal. It’s also smart, and may be free depending on your bank.

Virtual credit cards have been around for a while now, and the idea is simple. You can use the financial backing of your real credit card – or debit card, or checking account – to make all the purchases you normally would from a computer, but without using the card itself. Instead, you use an alternate, “virtual” credit card number, which is linked to your real one, but protected by computer encryption and other state-of-the-art security measures.

Here’s some reasons why a virtual credit card is safer than a credit card:

  1. Less reliance on merchants’ safety measures. With a regular credit card number, you have to trust that every place you use it has the best security measures in place. Here’s a recent news story from just last week: thousands of credit card numbers were stolen from upscale hotel chains like Marriott. And you might remember the case from last year where data on over  130 million credit cards was stolen. While you can’t use a virtual card to pay in person, it’s still a step you can take to get more security online, rather than leaving it up to other people.
  2. It’s useless if somehow stolen. Unlike your real credit card number, which can be used to gain other information about you and makes identity theft easier, this virtual number is completely useless anywhere else. It can’t be used to extract personal info, or to make purchases from any retailer except the one you used it for.
  3. You can set limitations. Some variants allow the virtual card to “self-destruct” after a single purchase, providing maximum protection in exchange for the small hassle of re-entering your real credit info to get a new one.  Others allow you to set a purchase limit or expiration date.

If this sounds weird or complicated to you, you’re not the only one. The idea hasn’t really caught on, despite the valuable layer of security it provides. PayPal is discontinuing its virtual credit card service – which has been around for three years – on September 22.

The reason: not enough people know and use it. “Simply put, we’re shifting our focus and resources to more popular products that provide a better customer experience,” PayPal says. Another reason is that more and more retailers accept PayPal as a method of payment, and the company provides similar identity theft protections already, revealing only your e-mail address to vendors. The advantage of the virtual credit card format was that anybody would take it, and anybody could sign up for one regardless of credit history.

If you were a fan of PayPal’s virtual credit card service or like the idea, there are a few major banking and credit companies quietly providing the same thing under different names — but only to people who have accounts.

If you don’t have an account with those institutions, there’s another option out there, but it’ll cost you:

  • ShopShield is free for 60 days, and always free when tied to your checking account. But if you want to protect your credit or debit card numbers, you’ll have to pay – options include pay-per-use or $100 for a yearly subscription. ShopShield is highly regarded by the Identity Theft Resource Center, a nonprofit nationally recognized for providing education and resources to prevent identity theft.

With any of these virtual cards, though, a word of advice: don’t use them to order anything where you have to present a physical card to pick up your order – things like will-call concert tickets, for example.  Not only does that defeat the purpose of hiding your real number, but the numbers won’t match up and then you’ll have trouble.

Looking for more advice on fighting identity theft and fraud? It’s not all about credit cards, you know. Check out our stories 10 Tip-Offs to Online Rip-Offs and 6 Tips for Going Underground Online.

Stacy Johnson

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