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What is a Virtual Credit Card

Virtual credit cards are digital cards exclusively available online. These cards function like conventional credit cards with important details like a card number, CVV, and validity dates. However, unlike regular credit cards, virtual credit cards are not available in a physical form. Thus, these details can only be accessed online.

Since virtual credit cards generate random account numbers during transactions, using the card adds an additional layer of security to your online transactions. Each number is only valid for a particular transaction or merchant. This digital format makes transactions safer, improving data privacy, reducing chances of fraud, and prevents tracking by advertisers. With the convenience of seamless digital access and stronger security barriers, virtual credit cards offer a safe and easy way to transact online.

If you’re an online shopaholic, owning a virtual credit card is a must. Keep reading to find out more about virtual credit cards.

Features and Benefits of a Virtual Credit Card(VCC)

Security

A virtual credit card is often intended for one-time use. Its validity ranges from 24-48 hours, and so there are minimal theft/misuse risks. You can cancel it at any time and it is shielded from data breaches too. These cards also protect your identity, providing extra security. Virtual credit cards or VCCs provide a secure and convenient solution for online purchases due to their limited validity. VCCs are governed by the Reserve Bank of India, thus to obtain one, you must follow KYC protocols and other formalities.

Credit Limit

VCCs come with a credit limit, like physical credit cards. You can complete multiple online purchases within this limit. You can also change the limit online but this requires the secret OTP sent to a registered mobile number. This provides added flexibility and control over spending, ensuring secure and convenient online transactions.

Immediate Access

Virtual credit cards can be created instantly, making this perfect for most online transactions. Since virtual cards are generated online, you can use them immediately. Traditional credit cards, on the other hand, may take a while longer.

Online Application and Blocking

The ‘Online Application and Blocking’ feature refers to the facility wherein you can apply or block virtual credit cards online. This ensures quick processing and minimises delays. In fact, online blocking of a VCC provides added protection and control over your card usage.

Same CVV

Virtual credit cards typically have the same Card Verification Value (CVV) for each transaction. The CVV is a three-digit code that is required to complete an online purchase. This makes online shopping easier and increases the security of transactions carried out using virtual credit cards.

Highly Convenient

Virtual credit cards in India are convenient to use because of their accessibility. Best of all, a VCC provides a hassle-free and simplified online experience. The absence of a physical card and the ability to manage the card online make VCC highly convenient.

Seamless Global Payments

Like any modern credit card, you can use a virtual credit card to complete global transactions without the need for currency conversion. Virtual credit cards can be used for transactions in any currency, and the amount is automatically converted, as needed. This feature is especially useful for you if you frequently make international purchases or travel abroad. Best of all, you don’t have to worry about losing a physical credit card when travelling.

Available for Free

Financial institutions provide virtual credit card facilities by leveraging strategic partnerships with payment processing networks like MasterCard. As a result, certain virtual credit cards can be used on platforms that accept the affiliated payment processing network. These networks charge merchants a processing fee for transactions, building revenue. This revenue model allows virtual card providers to offer the card completely free-of-charge to customers. Overall, this creates a cost-effective solution for digital transactions, while also facilitating profits for payment processing networks due to larger transaction volumes.

Virtual Credit Cards Offered by Different Banks

Here are the different online virtual credit cards available free of cost to a primary customer.

A) Offered by Banks

1. HDFC Netsafe:

Card number is not shared with merchant apps/websites
The card you create can only be used for one purchase
You can set your own limit for the Netsafe cards you generate
Accepted worldwide wherever MasterCard/Visa are accepted

2. Federal Bank One Credit Card:

Credit card with no annual or joining fees for the rest of your life
One of the market's lowest forex commissions of only 1%
The robust OneCard App lets you manage every element of the card
Uses the Swipe2Pay functionality in a 3D Secure transaction rather than an OTP

3. SIB OneCard Credit Card:

No joining or yearly fees
No CIBIL requirements
The credit card limit given is 100% of the deposit amount
Up to ₹5,000 per transaction in contactless payments are accepted without a PIN

4. SBM OneCard Lite Credit Card:

Take full control of your credit card whenever and wherever you choose
Track and manage each EMI separately.
There are no initiation fees, yearly fees, or additional fees.

Get 5X rewards on your top 2 spending categories, which can be redeemed right away for cash or app purchases.

B) Offered by NBFCs

1. FreeCharge Go MasterCard:

Earn 5% indefinite cashback on all of your purchases with the Freecharge app
There is no joining fee
Earn 1% cashback indefinitely on all other online and offline purchases
Earn 2% in cashback whenever you travel using Ola, Uber, Shuttl, etc.

2. Oxigen Wallet Virtual Card:

No bank account is necessary.
100% acceptance of India-wide merchants, both online and offline
Monitor, manage, and regulate business costs using an app, and keep them distinct from personal ones.
₹1,00,000 in free insurance

Why You Need to Use a Virtual Credit Card

There are plenty of reasons why you should be using a virtual credit card.

Enables easy online transactions
Minimises the risk of fraud
Fully eliminates the possibility of theft
Eliminates the trouble of carrying a physical card

How to Use a Virtual Credit Card

Using a virtual credit card is identical to using a traditional credit card for online purchases. You need to follow these 3 steps to use a VCC.

Step 1: Enter the 16-digit number of your virtual credit card
Step 2: Enter the expiry date for your VCC
Step 3: Verify by entering the OTP received on your registered number

That’s all. You will be notified with a message after the transaction is completed.

Difference Between Credit Card, Virtual Credit Card, and Debit Card

Check out the difference between VCC and other cards before creating a virtual credit card online.

Features	Debit Card	Credit Card	Virtual Credit Card
Form	Physical (Plastic)	Physical (Plastic)	Virtual/Digital (No Plastic)
Credit	Not available	Extends credit	Extends credit
Security	The card can be safely used and can easily be blocked by raising a request	The card can be safely used and can easily be blocked by raising a request	Safer than a physical card and can easily be blocked by raising a request
Usage	For both online and offline transactions	For both online and offline transactions	Only for online transactions
Transaction amount	The amount gets debited from your current or savings bank account	The amount gets debited from the credit limit on your credit card account	The amount gets debited from the credit limit on your credit card account or your debit card balance
Validity	For a few years	For a few years	1-2 days
Number of transactions	Unlimited	Unlimited	Usually, can be used only once
Fees and charges	Fees and charges involved	Fees and charges involved	No fee or charge

Important Things to Consider before Applying for a Virtual Credit Card

When requesting for a virtual credit card, it's important to take care of the following:

Having a primary credit card is a prerequisite to getting yourself a virtual one. Without a primary card, you can’t get a VCC.

Virtual credit cards have many benefits. They are designed to meet your online needs and are not for cash withdrawals.

Virtual credit cards are not in physical form. They cannot be used for offline purchases. They are solely designed for online usage.

Drawbacks of Virtual Credit Card

VCCs come with their own set of drawbacks. Here are some of the drawbacks of virtual credit cards:

Inability to use merchant swipe machines: Virtual credit cards are purely digital and do not have a physical card or magnetic stripe. This means that they can’t be used at physical merchant swipe machines.
Difficulty returning items: You may face difficulties while returning products/items purchased through VCC. Merchants may require additional verification or documentation to confirm the purchase, which can cause delays.
Short expiration dates: Some virtual credit cards have small validity periods of 24 to 48 hours. This can cause issues for users with subscriptions or recurring payments that require longer validity periods, as they may need to generate a new virtual credit card for each transaction.
Inability to withdraw cash: Virtual credit cards can’t be used for cash withdrawals. This is because they are not linked to a physical card or bank account. VCC is only valid for online purchases.

How To Apply For A Virtual Credit Card

When you apply for a conventional credit card, you have to wait for approval, verification, and card disbursal. However, with a virtual credit card, you need not wait for long. Instead, you can get your card details immediately and start shopping from day one!

To apply for a virtual credit card online, simply follow these steps:

Step 1: Visit the virtual credit card issuer’s website.
Step 2: Browse through the listed cards and choose one that fits your lifestyle and expense patterns.
Step 3: Fill up the online application form with all the necessary details.
Step 4: Next, enter the OTP verification code sent to your phone number and submit your application.
Step 5: Wait for the instant approval (in principle).
Step 6: Submit your KYC documents for verification.
Step 7: Post verification, log into your internet banking account and retrieve your virtual credit card details.
Step 8: Use your virtual credit card to make payments and transact online without safety concerns.

About Credit Cards Services

Credit Cards Partners at Bajaj Markets

Non Partners Credit Cards

No, you can't use virtual credit cards for offline or point-of-sale purchases since they only exist online.

International transactions on all cards depend on the issuer of the card. To find out if you may use VCC for international purchases, you can get in touch with the card's issuer.

The process of using a VCC involves entering the card number and its validity, followed by verification of an OTP sent to the registered mobile number. Once the verification is complete, the payment process can be completed online.

Yes, virtual credit cards are safe for several reasons. Since the card does not have a physical form. They only exist online. It cannot be stolen. It also usually only exists for 1-2 days and can be used for only one transaction, thereby making it safer to use than normal credit cards.

Consider obtaining a VCC if you need a risk-free and secure instrument for online shopping. These cards are designed to be used only once and can only be used online, making them incredibly safe.

Whatever credit limit is still available once your VCC expires is moved to your primary card. You can also use these cards for both domestic and international online transactions, making them a versatile option for online shoppers.

No, a virtual credit card can only be used for online transactions.

If you already own a credit card and link it online through your service provider. A VCC will be issued to you with the same limit as your original credit card. If you so wish, you can also restrict the VCC. You can also set a limit to the Virtual credit card if you choose to do so.

If your virtual credit card expires, then the balance credit limit is transferred to your primary credit card.

A virtual credit card gets generated instantly as it is linked with an existing primary card. As soon as you get the 16-digit VCC number and its validity, you can start using it for online transactions.

A person with a traditional credit card can apply for a virtual one. You must find out whether or not the issuer bank offers the service of VCC. If your bank does not provide virtual credit card services, you can speak with other banks or financial organisations.

You can apply online for a virtual credit card by simply visiting the lender’s website. Lenders that offer virtual credit cards have different variants listed. You can compare them and choose one that fits your needs and then apply instantly. Most lenders give you instant approval in principle, but you have to submit KYC documents for verification. Once vetted, your card will be ready for use. You can log into your internet banking account to find its details and start transacting.

A virtual credit card is a digital card that’s available online, but has no physical form. All core credit card details like CVV, card number, and validity dates are mentioned on the virtual portal. Since this data is available online, you can only use these cards for online transactions.

Most lenders offer virtual credit cards for free. That said, transaction processing fees can apply to these cards while the transaction is processed via the payment network.