It’s time for virtual credit cards!

Amal, manager of a computer store is afraid to shop online. He says, “I hate to give out my real credit card number”. He has valid reasons for his decision. Millions of people are the victims of credit card fraud every year. Most of them blame the internet. In fact, the top reason people shy away from internet shopping is the fear of theft of personal information.

Identity theft can be a consumer’s worst nightmare. Internet being a stateless and “faceless” entity allows the use of somebody else’s identity to commit Internet crimes.

Someone uses your name, your credit card number to rack up thousands of Rupees in bills, potentially leaving you to pay for a criminal’s spending.

Almost as bad, it could take months to straighten out the damage, convincing that it wasn’t really you that started up new service, convincing credit card companies that it wasn’t you who bought that new refrigerator, convincing reporting agencies that it’s not your credit record that should be dinged for unpaid bills.

While identity thieves use multiple tactics to get their hands on your personal information, stealing credit card numbers is a key component of their strategy. Besides the obvious advice to keep your credit cards closely guarded, there is another option you can use to thwart identity thieves — virtual credit cards.

Virtual credit cards are actually virtual credit card numbers — temporary numbers tied to “real” credit cards — which can be used for online or phone purchases, but cannot be stolen and used elsewhere by thieves.

Virtual credit cards, also known as substitute credit card numbers or controlled payment numbers, have already been around almost several years in other parts of the world but have not yet introduced in Sri Lanka despite it being an effective layer of protection.

Virtual credit cards work in slightly different ways depending on the credit card issuer, but the idea is the same. Here’s how they work: You sign up for the program from your bank and download their software. Enter your credit card info, and generate a new number whenever you want to make an online purchase.

The new number will be one-time use, have a small spending limit with an imminent expiration date, or will be able to be used multiple times but only with one merchant.

Your credit card company treats this number just like your regular credit card number, putting your charges with a virtual number on your regular credit card bill. Your actual account number will only be visible to you and your bank. The merchant never sees your number and can’t retain your information in his database.

For people in the West who enjoy shopping online but are concerned about the safety of their credit card details, virtual credit cards became a blessing. They actually work like other prepaid cards, and the limit is set by how much money you put on the card.

In this way it works similar to a gift voucher. Names for the cards differ, with MasterCard calling them MasterVirtual Cards and Visa calling them VirtualVisa Cards. Both are popular in the West and the States.

The biggest advantage of these virtual cards is that obtaining the details of the card are not worth their time, because the number can only be used for one specific purchase and the number expires very quickly.

This makes virtual credit cards much more secure than normal cards, and deters hackers from trying to steal your number. In the unlikely event that your number is stolen, you are covered for unauthorised purchases just as you would be with a normal credit card.

Obviously, another advantage is that these cards are convenient to use, because everything is stored online. There is no need to run around looking for your card number to input the details. All you need to do is click the mouse a few times and you will have completed your purchase.

E-commerce specialists say that Virtual credit cards have grown at a fairly strong pace over the past two years. Many international banks plan to aggressively promote its virtual card to appeal to consumers concerned about computer security.

Dan Clements, head of the Internet security firm CardCops.com, however, calls the limited credit card liability “an illusion”. Even so, Clements said, he doesn’t use a virtual credit card number because “it’s a hassle.” Yet his solution is equally time-consuming: He asks for a new credit card number every three months.

Virtual credit cards require a bit more effort than simply inputting your credit card number into the internet. But, considering the time, energy and money a theft of your identity could cost, they just might be worth it.

Isn’t it time the Sri Lankan banks, too, who offer credit cards consider this option?