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Explained: All about making safer online transactions with virtual cards

Virtual cards offer several layers of protection that make them immune to frauds

May 05, 2021 / 05:03 PM IST

Recently, there were multiple instances of data breaches reported. Personal and card details of customers saved on e-commerce websites, mobile-wallets, etc. were compromised in data breaches or malware attacks.

One way to overcome these concerns is to use a unique virtual card, which replaces the actual credit or debit card number.  Kotak Mahindra Bank offers the NetC@rd, which can be used only once. Similarly, HDFC Bank offers NetSafe. ICICI Bank and State Bank of India (SBI) have their own virtual card facilities. These virtual cards issued by the banks are for limited time periods or for single online transaction usage (features vary across banks).

Enhanced safety

“Virtual cards offer several layers of protection that make them fraud-resistant,” says Murali Nair, President of Zeta’s Banking Business. “We have seen an increase in demand for virtual cards, primarily because COVID-19 pandemic which has necessitated remote and instant on-boarding of users,” he adds.

Says Puneet Kapoor, President - Products, Alternate Channels and Customer Experience Delivery at Kotak Mahindra Bank, “With online transactions increasing, virtual cards are extremely convenient. The popularity of virtual debit cards is growing, especially among millennials,”


Some banks refused to divulge information on the number of virtual cards issued, citing confidentiality. Others did not respond to our queries till the time of publication.

Also read: Once passed, the Personal Data Protection Bill will make companies more answerable for lapses: EY

What is a virtual card?

A virtual credit or debit card is an add-on card issued by your bank. It reduces the risk of exposing the underlying credit / debit limit as the primary card details are not communicated to the merchant while making a transaction. Also, the actual card numbers are replaced in the virtual card issued by the bank.

Further, it allows you to set a transaction limit on the virtual card. To protect against phishing attacks, HDFC Bank even allows the creation of a unique password for additional protection on its NetSafe virtual card.

The minimum and maximum amounts allowed on virtual cards vary. For instance, SBI allows a minimum of Rs 100 and a maximum amount of Rs 50,000 per day. Once this virtual debit card is cancelled or if the date expires, the lien marked shall be lifted and the un-utilised amount will automatically be available to the customer.

How do I apply for a virtual card?

You can apply for a virtual debit or credit card through the net banking facility of your bank. Then, provide details of primary card while applying for the virtual card. You need to set a limit. To confirm the issuance of the virtual card, an OTP will be sent to the registered mobile number. Then a virtual card will be issued.

Also read: The pros and cons of paying credit card bills through third-party mobile apps

Where I can use the virtual card?

The use of virtual cards issued by banks is not limited to online transactions across domestic and international merchants accepting Visa or MasterCard network cards. You can also register your virtual cards on payment apps such as Paytm and Google Pay and make payments at physical merchant stores.

What is the validity of a virtual card?

The virtual cards issued by banks are for single use. The validity of a virtual card issued by a bank varies. For instance, SBI Bank virtual card is valid for up to a maximum of 48 hours or till the transaction is complete, whichever is earlier. Similarly, the NetC@rd from Kotak Mahindra Bank automatically expires after a successful transaction or after 24 hours, whichever is earlier.

You cannot reload any amount or renew it after expiry. However, you can apply for new virtual card after its expiry.

Also read: How to reactivate your dormant MobiKwik, Paytm and Freecharge mobile wallets

How do I make payments for my virtual credit card transactions?

The transactions made with the virtual credit card will be visible in your primary credit card statement. You must settle the dues before the due date to avoid any interest charges, penalty or late fees.

Does the bank levy any fees to issue a virtual card?

No. Currently, banks offer virtual cards free of cost.

Is using virtual card safe and secure?

Yes, the virtual card incorporates a comprehensive set of security controls. “These include, configurable authorisation controls, tokenizing the card, issuing dynamic PIN and CVV on the virtual card,” says Nair.
Hiral Thanawala is a personal finance journalist with 8 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
first published: May 5, 2021 10:37 am
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