What’s a virtual credit card?
The term “virtual credit card” is basically misleading in several ways. Because this modern, digital product usually does not have much in common with a real credit card. First and foremost is the element that gives it its name, credit. A credit card grants its users a short-term loan, or advances funds until the – usually – monthly settlement takes place via a linked account or the holder transfers the amount due to the bank. For this purpose, every credit card has a so-called drawing limit, which differs depending on the card operator or card type (e.g. Gold, Platinum, Business).
The situation is often somewhat different with virtual credit cards. In most cases, there is no credit line or advance from the bank. The cardholder must load the card with credit and only this credit is then available for online purchases, for example. At least, this is how it looks with many providers, even though they advertise with the term “credit card”. Yet, to make confusion perfect, there are also actual credit cards on a virtual basis. As with the familiar plastic credit card, these also have a credit limit set by the bank. BUT: This option is mainly found in the business environment while most offers for private customers are indeed prepaid or debit cards.
Furthermore, the term “card” can be confusing at first. A virtual credit card does not come in plastic form. The “card” holder only receives the relevant data that is otherwise found on the familiar plastic cards: