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Be Smart About South Africa

Should You Ditch Plastic and Get a Virtual Bank Card?

While the pandemic has caused many problems, it’s also encouraged us to get out of our comfort zones and explore new ways to shop and transact. Contactless payment is the new normal and banks are leveraging mobile tech to make it easier and safer to make purchases and payments.

Early adopters are now making use of virtual bank cards. These may sound like a gimmick, but they’re a genuine digital alternative to plastic cards. You can create them to shop online or in-store, with increased security a major benefit.

Personal finance website JustMoney, which aims to demystify money management, explains how these cards work, and their benefits and limitations.

Virtual reality

A virtual card is similar to a plastic card in that it has a unique 16-digit card number, CVV number, and expiry date. It can offer the same benefits such as travel insurance, rewards, and purchase protection. Digital cards are issued immediately so you can start using them straight away to shop online.

When you download a virtual credit card, you get a temporary credit card number that gives you access to virtual credit. When you shop with this virtual credit, you don’t have to input your real card number. The transaction is still routed through to your credit line and the transaction shows up on your account statement as if you had used your regular card information.

Says Sarah Nicholson, JustMoney Operations Manager: “You get more peace of mind with a digital card because these temporary card numbers are designed to prevent your actual account number from falling into the wrong hands.”

In some cases, a virtual credit card may be designed for single use. It’s then no longer valid if a fraudster steals your information through an unsecure internet connection or in a data breach.

Virtual cards also allow you to control the amounts loaded onto the card. You can load your virtual card on trusted websites or apps for safer online shopping, as well as wearable devices for contactless payments to use at any tap-and-go pay point.

For tips on safer online shopping, read here.

Read tips on tapping your plastic card.

Read more about card reward schemes here.

Virtual cards are also handy for companies that need to manage staff spending. “Before the pandemic, you probably worked in an office and asked your office manager for cash for a purchase. Your company can now allocate an amount to a virtual card for that specific item and ring-fence it,” says Nicholson.

Banks on board

Local banks are already on board with digital card solutions, some with features that are particular to that bank. First National Bank, for example, launched its virtual card in January ― it’s activated and stored in an FNB customer’s profile on the FNB app. The FNB virtual card is not a temporary number, but lasts for five years or until a customer cancels it. The CVV security number, which is normally printed on the back of credit and debit cards, changes every hour. This adds another layer of security.

FNB says that customers can load the card and link it to a debit, credit or fusion account at no additional cost. They can also create multiple virtual cards for each transactional account. The virtual card is applicable to FNB Retail, Business and RMB Private Bank clients.

The FNB virtual card can be loaded for subscription payments even though it has a dynamic CVV, as the payment linking will happen on the first transaction. The client does not need to change payment details when the CVV changes, says an FNB spokesperson.

Drawbacks to digital cards

Because virtual credit cards are designed for online- and other card-not-present transactions, and some businesses don’t understand them, there are some situations in which using a virtual number could potentially have some snags.

If you want to return a retail purchase, the retailer might want to pay the refund to the same account number as was used for the purchase. If your virtual card number has already expired, you may have to get credit instead.

You could also experience a hitch if a supplier wants to verify your account information. For example, you might use a virtual card number to book a rental car or hotel room online. When you check in, the company might want you to pay with the same card you used for the reservation. However, given that your virtual number is not the same as your actual card number, they might not understand that they are tied to the same bank account.

Apart from these initial hiccups when using virtual cards, it could be well worthwhile considering how you could adopt them in your work and home environments.

“South African financial services are recognised for their innovation,” says Nicholson. “There are plenty of examples of how tech has made it easier to do business and handle your personal finances. For example, many small entrepreneurs used to struggle with the cost of setting up a point-of-sale machine and dealing with unreliable or interrupted connectivity. Then mobile payment apps were launched, and these enabled entrepreneurs to receive payments via their smartphones. “It could be well worthwhile exploring digital cards and other tech options that make running your personal and business finances easier and safer.”

How to get a virtual card

If your card issuer provides a virtual card feature, you can ask for one through your online account with the bank. When you do, you’ll get a randomly generated card number, expiration date and security code that are tied to your actual account.

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