Thinking about credit cards, the picture of small plastic cards involuntarily stands in front of your eyes. By inserting into readers or terminals, money can easily be disposed of or cash can be withdrawn. This is the classic field of application. The Internet age opens up another possibility: online shopping with the virtual credit card. E-commerce is the magic word and online shops are springing up like mushrooms. For Internet purchases, the credit card is the preferred method of payment internationally. In contrast to shopping in the stationary trade, there is no insertion and removal of the card here. Only the map data is needed. Plastic is dispensable. That’s exactly what a virtual credit card is designed for. What virtual credit cards are, how they can be used and what advantages and disadvantages the cards have without plastic.
Fields of application and prerequisites
For what purposes is the virtual credit card worthwhile?
Virtual credit cards were originally designed for Internet use. The network offers a wide range of uses: It ranges from shopping at online retailers to network subscriptions to financial transactions or games in online casinos . In Internet transactions by credit card usually requires the name of the cardholder, the card number, the expiration date of the card and the check digit. The mobile phone makes the card use outside the network possible. Terminals set up for contactless payment can be equipped with the card data on an NFC-enabled smartphone. Cash withdrawals at the machine are not possible.
The virtual credit card as a prepaid credit card
Virtual credit cards are available from the usual providers. They only work on a credit balance basis . This is a typical prepaid credit card. To be able to dispose of the card account must be charged. Dispositions beyond the credit are not provided . In this respect, virtual credit cards differ from common credit cards. With these, dispositions up to the credit limit are possible, a credit on the card account is not required. Whether it remains with the prepaid principle, if there are more offers in the future, remains to be seen. In principle, virtual credit cards are conceivable as cards with a credit limit.
Who is the Virtual Credit Card suitable for?
Due to the prepaid principle, the usual credit check is eliminated for virtual credit cards. The card is thus easily accessible for users who would have difficulty obtaining a credit card due to lack of creditworthiness. Those who can not prove regular and secure income or who have negative characteristics at the Bank can not expect a rejection of the card application. Virtual credit cards are also readily available to students or students, the unemployed and those with poor credit ratings . Typical target groups are users who want to use their credit card on the Internet or have a high affinity for digital payment. On that the map offer is aligned in the first place. If you would like to receive a classic credit card and have a negative Bank entry, you may be able to delete incorrect Bank entries and thus improve your Bank score.
How the virtual credit card works
What sets the Virtual Credit Card apart from popular models?
The following table compares the different functionalities of virtual and standard credit cards.
|card functions||Virtual credit card||Classic credit card|
|Contactless payment at POS terminals||Yes||Yes|
|Pay on the Internet||Yes||Yes|
|Dispositions of funds||Yes||Yes|
|Orders up to the credit limit||No||Yes|
For hotel and car bookings virtual credit cards can not be used. Hotels and car hire providers usually expect the presentation of a classic credit card . Even prepaid cards are often not accepted. The car rental companies, the rejection depends on the rental deposit. When renting the deposit will be blocked on the credit card. The credit line is used for this because the card company has an almost unlimited cover guarantee. There is no guarantee for credit card credit cards. They have less financial security.
How is the virtual credit card created?
Virtual credit cards are readily available and can be used immediately. The usual physical shipping of the card is eliminated. The procedures for creating a virtual loan vary slightly from provider to provider.
- In order to receive a card, the customer must register with the provider .
- In addition to the usual personal information, the password and a username are to be defined. This data is used to set up the card account and later access.
- With the successful registration, the card data is sent .
- The activation takes place in the network via an access code . It will be made available immediately after registration via SMS or e-mail.
With the activation, the card can not be used immediately. For this, the card must first be charged with a credit. As long as there are credits of up to 100 Euro on the virtual credit card, it can be used immediately. For higher amounts, a legitimacy check is required before using the card – unless the card issuing authority has already verified the identity in another context. The postident procedure is used for this. Legitimation takes place at a post office. In this case, charging may take three to four days, after which the virtual credit card can be used without retesting.
How does the card work?
A virtual credit card works like a regular credit card used for Internet transactions. With the indication of the cardholder , the card number , the check digit and the period of validity the order can be arranged on the internet. The card account will then be charged with the transaction. As long as there is still a credit on the account, further dispositions can take place. If it is used up, it must be recharged if the card is to be reused.
How high may the recharge amounts be?
In the case of the recharge amounts, the cardholders usually have large margins. Small amounts over a few euros are also permissible as charging sums of several thousand euros. For security purposes, a maximum amount of about 10,000 euros is customary for security reasons. Charges beyond that will not be allowed. Some providers limit the annual turnover. The limits are generally generous and allow larger purchases and transactions on the net. In this context, the actual need for disposal should be covered.
Contactless payment via smartphone works through Wallet apps – a kind of electronic wallet – offered by different mobile service providers. Many wallets have virtual credit cards that work on a prepaid basis. Others are based on card data from classic credit cards.
Fees and billing
What are the fees?
Many virtual credit cards are often not required to pay an annual fee or are much lower than usual. The card issue – at least the first card – is generally free. Nevertheless, the card is not free of charge . In part, there are fees that are not required for traditional credit cards.
To be met:
- Fees for charging : Charging by bank transfer or standing order is usually free. The possible cash deposits sometimes fees up to five euros are due.
- Fees for a plastic card : If a plastic card is requested in addition to the virtual card, an extra fee is often due. Cash withdrawals with this card may incur additional charges.
- Fees for the activation : Fees are sometimes charged upon re-activation. If the virtual card is hardly or not at all used, an automatic blocking takes place after some time. Then an activation is necessary again.
- Fees for foreign assignment : These fees are also provided for virtual cards. The assignment abroad is already defined via an internet purchase on a portal, where the portal operator is based in (non-EU) foreign countries.
Anyone who misjudges their use of the fee and has trouble paying the fees can resort to a loan from Good lender online at any time and provide financial relief with a small instant loan.
How is the billing of the virtual credit card done?
The charge is made by the payment transfer from the checking account . These can be transfers or standing orders. Charging via Sofortüberweisung is also possible. An exception is the cash deposit.
Monthly billing of card orders is not common with virtual credit cards. This results from the functional principle. Cardholders can at any time view the debits made on their card account and, if necessary, create digital bank statements. The virtual credit card has many advantages and is readily available.
Advantages of the Virtual Credit Card
These advantages are offered by the virtual credit card:
- There is no risk of card theft or card loss
- The prepaid principle protects against uncontrolled expenses
- The virtual credit card is Bank neutral
- Access is no problem if creditworthiness is poor
- Applications and orders are simple, fast and reliable
- There is omnipresent transparency given by looking at the card account
Disadvantages of the Virtual Credit Card
The virtual credit card has the following disadvantages:
- The liquidity and credit benefits of a common credit card are lacking.
- Cash withdrawals are not possible.
- As a means of payment when traveling the virtual credit card is not suitable. If you are planning a year abroad including costs, another credit card model recommends itself.
- Possible uses in stationary trading exist only in the context of mobile payments.
- The need to recharge is sometimes perceived as a nuisance
- Depending on the fee model, charge level and card usage, the virtual credit card can be expensive
Special features of the virtual credit card
Is the credit rating checked and does the Bank learn about the card?
Unlike common credit cards, the virtual credit card does not need a Bank query . There is no credit check . It is superfluous due to the prepaid principle. Applications are not reported to the Bank.
Is there a minimum term?
With regard to the legal framework, virtual credit cards do not differ from common cards. An essential feature of the card is the validity period. As with plastic cards, there is an expiration date. Depending on the issuer, the validity period is two to four years . A peculiarity of virtual credit cards is that when not in use for a long time automatically a card lock. To be able to use the card again, a new release is required.
What should be considered when canceling the credit card?
At termination, there is no difference to traditional cards. With the order of the virtual credit card comes a card contract. The terms of the contract vary from provider to provider. Frequently, the contract periods are one year , which automatically extend without further notice for another year . As a rule, it can be terminated with a period of one to three months. The termination should be in writing, at least in text form.
Can the mobile bill be used for payment?
Meanwhile, some mobile subscribers are offered the opportunity to make payments through their mobile phone bill . For charging the virtual credit card, this method is not yet applicable.
What differences and similarities exist to the PaySafeCard?
PaySafeCard is an electronic means of payment , which – like the virtual credit card – is geared towards Internet purchases and manages “without plastic”. Both systems use the prepaid principle. In this respect, there is a comparable functionality. At PaySafeCard, the user purchases electronic value-added vouchers via PINs , which can be used for payment by merchants who participate in the system. The PINs are available at retail outlets. The applications are limited to telecommunications, entertainment and online games . The possibilities of using the virtual credit card are wider because there are many more points of acceptance.
When is a virtual credit card worthwhile and when is it not?
Virtual credit cards are above all something for card newcomers who want to use a convenient payment option for Internet purchases. The prepaid principle makes the card accessible to users who would not receive a traditional credit card, while ensuring spending discipline . The virtuality of the card protects against theft and loss. Anyone who places value on credit cards on more than just the Internet use drives better with a plastic card. Despite the limited functionality , virtual credit cards are not cheaper than traditional credit cards. It depends on the concrete terms comparison.