Mobile Virtual Cards

  • 19 October 2019 | 1511 Views | By Mint2Save
virtual credit and debit cards

When we are largely restricting the use of plastics, how could the finance industry be left off! The usage of plastic has been a great concern for the planet. Hence, even physical transactional cards are been reconsidered, remodelled and their virtual counterparts have eventually taken off.

Not only plastic, but transactional cards could save a lot more. ATM machine maintenance, tellers, phone banking services and, at last, papers. So, a mobile virtual cards is basically a very eco-friendly option to go for. But, is it just the eco-friendly nature that is promoting the digital cards? Certainly not. In this article, we shall explore necessity, history, along with the uses of virtual cards.

Besides being an eco-friendly way, it is too much convenient way as well. Payment happens just within seconds and now even shook payment options exist. This saves time and the number of activities involved. For instance, a normal cash based transaction would involve taking out a wallet and giving a note, and then taking back loose remaining money. This was the conventional transaction method, that dominated the era of black and/ or brown wallets.Now, just a swipe of a card or even a mobile phone can take care of all day to day expenses. One now doesn’t need to carry his wallet all around, the card or the phone can suffice for almost all payments. 

Plastic money has an interesting history. Diners Club and American Express were the first to launch plastic cards in the USA, in 1950. It was widely used only in the later 1970s, after setting certain standards for magnetic strip. In the late 1990s, plastic cards were commonly used by the general public and by 2001 plastic cards replaced cash, making itself ‘ready money’ for transactions. But owing to the tides of time, plastic money will become redundant in the near future as the use of mobile virtual cards increases. 

The merger of two three terms – “virtual” , “mobile” and “plastic money” has opened various entryways for inventive and creative abilities for innovation organizations. One such type of innovation called Mobile Virtual Card (MVC), empowers a cell phone to serve as interface for internet based and smart store based payments. It gives a protected option in contrast to customary plastic cards by using the current universal installment framework.

As a result, digitization of money and its codification has been an opportunity for innovative startups as well as research divisions of large payment corporations. The first transition of money was from thick wallets to plastic money. It is now migrating to mobile phones. Highly encrypted cards are now being saved to one’s mobile phone.

Virtual cards are physical cards that exist in the mobile device digitally

The virtual card has an alternate card number (as a security feature) and as far as possible carries an expiry date, which is deemed to be equivalent to the first physical card. In spite of the fact that the virtual card is noticeable on the cell phone (locally), the information relating to the card is saved money on the bank’s cloud-based server.

People can now be free from carrying plastic cards that does not guarantee safety to their finance. 15% of smartphone users use virtual cards to pay for the purchases they make, as per the 2013 survey data by market research firm CMB. Its usage will become double of what it is now and will only rise in the coming future, as per CMB. “India is in the midst of huge disruption in the world of both financial technology and social innovation. By 2020, my view is that India will make all debit cards and credit cards, ATMs and POS machines totally irrelevant” says Amitabh Kant, CEO of NITI Ayog, in a panel discussion. There are a huge number of transactions that are driven by UPI.

An encrypted copy of the debit or credit card in your phone, and / or a

Everyone should participate in this trend due to some of the benefits that can significantly affect their traditional payment process only to make it more efficient:

  • Safer and secured

The information that is stored for mobile virtual cards is encrypted which protects your card details making it inaccessible to others. When the data is transmitted to make a payment, it is done by using encrypted code instead of actual bank account details. 

  • Anytime and Anywhere 

One can use their respective virtual cards at any given time and place. One does not have to look for an ATM to encash the amount needed to be paid. Payments are no more time-bound and territorial boundaries cannot be an impediment anymore.

  • Widely Accepted 

With the rising popularity of virtual cards every retailer has upgraded its transaction modes to the payment card reader. Samsung pay, Apple pay, Android pay are some of the widely used payment card readers with Samsung most widely used as it comes with NFC technology.

  • Faster Store Checkout 

With continuous innovations, there are mobile applications in development that will help you in making payment while you are still walking. There does not have to be a halt in a queue to make payments in the counters.

  • Online Shopping 

Typing of long card numbers and other details became unnecessary with the introduction of the virtual card. With faster mortar store checkout, it also facilitates a quick checkout from an online store.

Drawbacks of Mobile Virtual Card: 

A virtual card is similar to a real payment card but exists only in your smartphone, so you cannot use virtual cards as you used its physical counterpart. Since there are frequent upgradations in smartphone technologies, 

You cannot withdraw cash from ATMs using the virtual card. 

There is the upper limit for transactions per day basis beyond which you cannot perform transactions, hence it is not useful for a transaction that requires the greater amount in the transaction, limits offered may vary from banks to banks. 

Not every virtual card can offer an international payment option. Furthermore, mobile connectivity is also a possible hurdle. Fluctuations in internet services provided by the carrier can result is disconnection from the card’s server and one might not be able to carry out any transactions at all. 

How does Mobile Virtual Card work?

  • If you need to buy something online but don’t have a bank card and are concerned about security while shopping, then the virtual card is something that you are seeking. 
  • One just has to set a maximum daily purchase limit, which depends on the virtual card that one wants to issue. The issuance is confirmed with the respective card pin number. 
  • To purchase something online purchases you have to open an online shop on service. 
  • After picking up the item, proceed to checkout and then enter your virtual card detail like 16 digit card number, name on the card the expiry month and year and your CVV code and then you are ready to make payments. 
  • One can change the virtual card set if needed and can also be blocked anytime or do other settings. 

Mobile Virtual Cards are more secure than the physical ones 

Recent J.P. Morgan survey states, 62% of companies were targets of payment fraud in 2014, with the most targeted methods being checks, credit/debit cards, and wires. From developed nations to developing countries, plastic money frauds have been on a rise. Frauds and thefts such as card cloning, OTP based thefts etc., have often put the credibility of plastic money under scanner. Now, with the cards being translated into 0’s and 1’s, there are lesser chances for hackers to decode them. 

The two most common forms of vendor e-Payments are the traditional ACH and Virtual Cards. Adding virtual payment method as your default method to your accounts is certainly a more efficient method for paying bills, than any other methods. 

But beyond quicker supplier payments, the additional benefits of virtual payment processing are significant. 

Here’s how virtual card payments work and how it benefits both businesses and consumers. 

  • Virtual Cards quickly accepts the payment.
  • Unlike cheques and ACH payments, with virtual payment cards, the transaction takes place without sharing or exposing the bank account information. 
  • This is an even stronger benefit in using virtual cards that lessens the security concern, as information of your bank account is never exposed. 
  • Virtual card numbers create a one-time password for all the transactions and specific amounts.
  • Do not need any other machine.
  • Your virtual payment address is your unique accessibility point. 

How does Mobile Virtual Card benefit banks and consumers both?

With Mobile Virtual Card, banks and consumers both have the transaction details and can track the transaction until it is successful.  

When it comes to the bank, initial costing pertaining to manufacturing, finishing and transportation of the cards are avoided. The bank doesn’t need to check your records to see where are you located, at what time would you be available to accept the card, whether there are multiple address or contact numbers to deliver the card.

On the other hand, the user has the convenience of using the card without the fear of card being lost or stolen. The details are already encrypted in the phone and the as long as the phone is functioning in an optimized manner, there are lesser chances of any trouble causing issues raising up.

Purchase Online with VPA

Online shopping and eCommerce are increasing day by day. With a Virtual Payment address (i.e., an online identity for the card or the account you are using), you won’t have to enter card number, CVV and expiry. Just a VPA and you are done.  

Easy B2B transaction 

You can pay your bill directly to the company without cheque or demand draft. Moreover, your transaction is recorded on both the ends. So, you can limit your transaction limit for your employee. This way many fraudsters could be controlled as and when noticed. 

Mobile Point of Sale

You can sale from anywhere and receive the payment safely. Your business will get truly online exposure and similar transaction provision. There is no requirement of keeping a cash register at the store, the money will directly get transferred to your account or the wallet concerned. 

Maximum Transparency

VCNs gives a very clear audit trail, via the unique ID of the card number. The details like exactly who paid whom for each and every purchase gets recorded. VCNs also allows you to have control over your commercial card spend to your SarbanesOxley (SOx) auditor.

On the Spot Transaction 

This is the biggest benefit of virtual cards. You can transact the amount on the spot, without having to carry the cash all the time. This eliminates the need to carry cheques, large amounts of cash etc. One can just send across the funds using his virtual debit or credit card and the funds are transferred within seconds to minutes. 

Automate your Monthly Bills

With automation, you don’t have to make regular commute for making the regular bills. You can even receive the cashback on certain banks by using their respective cards. Without having to interrupt your current work, you can get the work done.

Automate your Regular Invoices

Send and receive the monthly invoice by automating them with the virtual payment method. You can track your invoices and know the exact details of each transaction without disclosing your bank account details.

Final Take Away

Digitization has brought so much of ease to our lives. You cannot treat the monetization system as a possessive thing. Codification of money has been a hot cake among many topics. Now, with virtual cards, one can be assured about the safety of funds, as well its global usage. As its nature has been, currency has to be kept circulating. Using virtual cards will serve the purpose to the fullest. 

Moreover, the environment is saved greatly. The ecosystem needed to maintain the physical card is huge. It is been effectively and better switched with virtual cards.

Banks are now receiving this innovation in their suite of items. For example,

  • Citibank offers virtual Mastercards for practically every one of the cardholders. It offers Virtual Card Account Solutions for completely incorporated FX abilities to Destinations of the World (DOTW).
  • Bank of America offers a MVC-based help called ShopSafe for Visa and MasterCard cardholders, through a portable wallet like Apple Pay or Google Pay.
  • ICICI Bank has utilized the Host Card Emulation (HCE) innovation to deliver this arrangement.

Other than banks and money related establishments, associations, for example, Extend have created MVC stages so banks can give virtual charge cards to representatives and temporary workers quickly. With the Extend stage, an organization can control the quantum of credit broadened and the kind of buys made.

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