Virtual cards offer more protection when you’re making purchases – especially online. Angelique Ruzicka finds out how they work.

Shopping online has always come with risks, especially when it comes to fraud, but the introduction of virtual bank cards is doing much to reduce the risks associated with digital transactions.

Virtual cards are just like normal cards but they’re digital instead of physical pieces of plastic, and reside within an app.

All of the big five banks (Absa, Nedbank, Standard Bank, FNB and Capitec), as well as newer players in the banking landscape like Discovery Bank and Spot Money, offer virtual cards free of charge.

A virtual card is typically linked to your main bank account, or to a mobile payment app such as Apple Pay or Samsung Pay and operated through your banking or mobile app.

What are the advantages?

The advantage of virtual cards is that the payment details change regularly which helps to reduce the possibility of card details being stolen when used to make purchases online.

Chris Labuschagne, CEO of FNB Card, explains: “What stands out for our customers as they take up the FNB Virtual Card, is the dynamic CVV security number that changes every hour to help minimise the risk of fraud. The virtual card is safely stored on the app and customers can temporarily block, cancel or replace their xard via the app.

“Our customers can also use the virtual card to pay digitally via Scan to Pay, or during checkout for online purchases. Customers can load their virtual card on trusted websites or apps for safer and convenient online shopping, as well as wearable devices for contactless payments, ensuring that they enjoy a complete digital and safe experience.”

All the banks we contacted said the virtual cards could be accessed by all banking clients regardless of which bank account they were using – they only needed to access the feature through their banking app.

How can virtual cards be used?

Virtual cards are best used for online purchases, but they can also be used for QR code payments via Scan to Pay at point-of-sale facilities. Customers generally have the ability to create more than one card and can assign each a different purpose.

“Customers have the flexibility to create multiple virtual cards for each transactional account, or multiple virtual cards to better manage spend across merchants,” says Labuschagne.

“A customer can for instance create a dedicated virtual card on their Fusion account for their Netflix subscription and have a dedicated virtual card on their credit card for online shopping.”

How do they prevent or reduce fraud?

There are layers of security with a virtual card. A spokesperson for Capitec explains: “The card is stored on our banking app, which means the details are protected by your pin or biometric fingerprint and you never have to worry about the card being lost, stolen or duplicated.

“You can also manage your virtual card limits on our app and if you are concerned that your details have been compromised the card can be cancelled and a new one issued instantly at no additional cost.”

Are they all the same?

All banks offer a virtual card service free of charge, enable you to make more than one virtual card and typically require one-time passwords as an additional security feature.

Standard Bank, however, offers two subtle differences. It doesn’t directly link a customer’s main account to the virtual account. Instead, customers pre-fund the virtual card through their transactional account.

“This limits the exposure as confidential account information is not made available if a purchase has been made using a virtual card,” says Nelisa Zulu, head of merchant solutions at Standard Bank.

Additionally, Standard Bank customers can also create virtual cards through the Shyft forex app.

Zulu says: “Our Shyft solution allows virtual cards in four currencies, namely, USD, EUR, GBP, and AUD. These cards are available on our Shyft App.”

The way of the future

All of the major banks’ spokespeople we approached maintained that virtual cards are the future of shopping.

“Being able to issue ‘single-use’ cards for transactions one might not sure about, having multiple cards (being able to use a card for one purpose only) and not sharing the details across different websites and shops and of course, being able to replace cards in real time ‒all of this contributes to virtual cards being the superior choice for online transactions,” says Jacques Meyer, head of product at Discovery Bank.

Other contactless payment systems

While virtual cards are certainly an upgrade from the plastic card, they’re not the only way in which customers can make safe digital payments.

You can use your phone or digital watch to make payments through contactless facilities such as Samsung Pay, Apple Pay, mobile banking platform Spot Money, and even WhatsApp.

Samsung Pay allows you to make purchases using your Samsung Galaxy device or watch. Similarly, Apple Pay is an option for iPhone and Apple Watch users.

Banks don’t charge customers additional fees if they use their cards through Apple Pay, but consumers could be charged by other third parties such as a cellphone operator.

In April, Nedbank launched a collaboration with Mastercard and Ukheshe called ‘Money Message’, a payment platform that lets small and microbusinesses receive secure in-chat payments from their customers via WhatsApp.

To receive payments, small businesses can send an invoice requesting payment from any customer through WhatsApp.

While it offers convenience, Money Message does charge small businesses a 2.75% merchant fee per transaction as well as a R2 fee per invoice generated.