A new wave of startup firms are looking to revitalize the credit card industry with their own approach to solving the online fraud issue. Companies like Token Payments, Pay With Privacy, and Final offer a virtual credit card system that allows users to generate multiple different credit card numbers. These card numbers are known as disposable credit cards; they’re also known as virtual credit cards since they would largely apply to online use.
It could be a novel solution to a seemingly unstoppable problem. Despite the investment in detection and security in recent years, the number of victims hit an all-time high of 15.3 million Americans in 2016. Furthermore, recent security breaches, most notably involving Equifax, cause quite a bit of chaos in the credit card industry.
However, a disposable, virtual credit card number with customizable purchase limits, merchant authorizations, and transaction limits could be the perfect solution to the age-old problem of stolen or spoofed cards. “It’s a way of muddying the waters,” said Boling Jiang, CEO of Pay With Privacy. “Fraudsters get these numbers, but they’re useless.”
Here’s a bit more on how they work. Through these companies, customers link a bank account or payment account to a free online service. This service offers virtual credit card numbers where you can apply funds to, so you can pay for a subscription or purchase using these virtual numbers which ultimately draws from a payment account even though the transaction involves a credit card number.
Since they are customizable, you can authorize them for just a single, or more than one, purchase or for one specific subscription. If they are used in any other matter, then the transaction is cancelled. In the event of a breach at an online retailer or subscription service, that specific card number wouldn’t be transferable towards transactions anywhere else.
One-use virtual cards can greatly reduce your chance of stolen credit card information, and the limit on the number of virtual cards is practically infinite. Furthermore, protecting online payments is about more than just the money. In fact, losing your credit information can be devastating on many levels.
If you are a victim of credit card fraud, life can be pretty awful. The inconvenience can be a serious burden on a victim’s time and patience. Waiting for a replacement card only adds insult to injury after your data becomes compromised. On top of that, your credit history and credit score could be at risk if you don’t stay on top of a breach.
The technology has yet to catch on in the mainstream, but there is potential in virtual card payments upsetting the status quo for the traditional credit card industry and fraudsters alike. At any rate, consumers ultimately hold the keys to its success since they need to buy they product.
Author: Andrew Rombach
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