What are Prepaid Virtual Credit Cards?

Gabriele Sturmer

Prepaid virtual credit cards are disposable credit cards that typically are sent to users via email. Unlike traditional prepaid credit cards, virtual cards are normally used for online purchases, for which a physical card is not required. Companies that offer virtual credit cards usually require the user to transfer money from a bank account, existing credit card or online money transfer service. The user transfers a specific amount of money to fund the card, and some companies allow the user to reload the card for future purchases.

Credit card logos.
Credit card logos.

A credit application usually is not required for prepaid virtual credit cards. The cards usually have an expiration date like a normal credit card, so the user must be careful not to leave a balance on the card near the expiration date. If a balance remains, the card provider might not issue a refund for any remaining funds. In addition, many companies have a required minimum and maximum balance for opening the account or will limit the amount of future reloads.

Credit card being swiped through a terminal.
Credit card being swiped through a terminal.

Fees can also be part of the card's membership terms. Card activation fees are sometimes on a sliding scale, requiring a higher fee for a higher initial amount on the card. There also can be a monthly fee that is required to keep the account active. If a reloadable card is desired, one might find that the fees are more expensive than that of single-use cards.

Many users purchase prepaid virtual credit cards to help avoid online credit card fraud. A disposable card number and a limited account balance can help ease the fears of those who worry that the card information could get stolen. Online auctions and shopping websites are common reasons why one would purchase a prepaid virtual credit card, but some users also purchase them as convenient gifts for special occasions.

A concern that some companies have is that some users could purchase prepaid virtual credit cards to use for online credit card fraud. When the user purchases the online credit card, he or she receives the card number, the security code and the expiration date. Even though a few companies do not require the buyer to give a real name or address, this does not mean that a person who uses the card for fraud will not be traceable if he or she commits fraud or purchases illegal goods. Law enforcement agencies often have ways of tracking down individuals who think that they have anonymity on the Internet.

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