Virtual Credit Cards Help Fight Fraud
Last updated December 5, 2025
Americans lost $12.5 billion to credit card fraud in 2024, a 25 percent increase from the previous year, according to the Federal Trade Commission.
Even so, credit cards are one of the safest ways to pay for products and services. They come with built-in fraud protection mandated by federal law; report a fraudulent charge within 30 days and you won’t have to pay for it.
Virtual cards, which act like proxies to physical cards, add an extra layer of protection. If scammers obtain your physical credit card number, they can use it to buy products or services. You won’t have to pay for these charges, but your credit card company will likely shut down that account and send you a different card. It’s a real hassle to switch over automatic payments to the new card number. Virtual credit cards can eliminate that aggravation.
How Do Virtual Credit Cards Work?
A virtual credit card is not a physical card; it’s a 16-digit number with an expiration date and security code (CVV) that are different from those on the connected physical card.
Virtual cards make shopping online safer because you never supply your real card number during checkout. To the merchant, the virtual card number appears to be a regular credit card number.
“The security feature that’s unique here is no one sees your actual number,” said James Lee, president of the Identity Theft Resource Center. “If there’s a data breach somewhere along the food chain, the real number is never available to whoever got access to that [virtual] number.”
One more layer of security: The digital code sent to the merchant is encrypted.
“If a thief gets a hold of your virtual card number, there’s really very little, if anything, they can do with it,” said Scott Talbot, executive vice president of the Electronic Transactions Association. “Even if you got hold of it and you unscrambled it, it still wouldn’t be an actual credit card number.”
It’s similar to what happens with Apple Pay, Google Pay, and other digital wallets, which generate a one-time encrypted code when you tap to pay, keeping your card number hidden from the merchant or hackers.
Not all virtual cards work the same way. Each credit card issuer decides which options to offer. Virtual cards are typically intended for one-time use. When ongoing purchases are allowed, you can cancel the virtual card at any time. You may also be able to restrict that card to a single merchant or set an expiration date.
Many financial institutions offer virtual cards that let you set spending limits. If you give your teen access to your account to shop online, a virtual card can help prevent them from overspending.
Because virtual cards are linked to your credit card account, transactions and any rewards will show up on your monthly statement as usual.
Use of Virtual Cards on the Rise
Virtual credit cards have been around for about 25 years, but they’ve surged in popularity with the growth of online shopping. An estimated 42 percent of Americans used a virtual card in the past six months, according to PYMNTS, a website focused on online payments. The study found that 65 percent of consumers say they’re likely to use a virtual card in the next year.
What’s driving the growth? More than one in three consumers (36 percent) have experienced credit card fraud and want a safer way to pay.
“As more customers adopt Apple Pay, Google Pay, and tap-to-pay, virtual cards feel familiar and not foreign,” said Sam Miller, CEO and co-founder of Kasheesh, a digital payment platform. "That growing comfort, combined with added security, instant access, and real-time control, is a key driver in customer adoption.”
Digital Wallets vs. Virtual Cards
Virtual cards and digital wallets are not the same; they differ in several important ways.
A digital wallet is an app that stores your payment methods—including credit and debit cards, bank accounts, peer-to-peer payment accounts, and rewards cards—in one place. Think of it as your physical wallet in digital form. You can use digital wallets for online shopping or in-store purchases.
A virtual card, on the other hand, is a unique identifier created to protect your real account. While this enhances security during online shopping, virtual cards cannot be used in a store.
A Few Potential Drawbacks
Before using a virtual card, consider these potential limitations:
In-Person Identification: You could have a problem if you make a purchase online with a virtual card and then need to verify your identity when picking it up in person. The number on the physical card in your wallet won’t match the one the merchant received. The same issue can arise with hotel and car rental reservations, which typically require you to present the physical card used to make the booking.
Recurring Transactions: Since most virtual card numbers are temporary, they are not for subscriptions or other recurring payments. Only use the virtual card number if you are certain it’s not for a one-time transaction.
Tracking Technology: Paying with a virtual card does not ensure privacy. Some providers may share purchase data with merchants or ad-tech platforms to track purchase behavior. If that’s a concern, check the issuer’s privacy policy.
Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He has been protecting consumers for more than 40 years, having covered the consumer beat for CBS News, The Today Show, and NBCNews.com. You can also find him on Facebook, Blue Sky, X, Instagram, and at ConsumerMan.com.