Touted as a more secure alternative to credit and debit cards for purchasing goods and services online, virtual credit cards are gaining momentum, being used by increasingly more individuals and businesses alike. However, not everyone is as excited about them as the companies that offer them, and, in this article, we explain why and describe how you can easily detect virtual credit cards using our BIN database.
Ireland-based provider of B2C, B2B and P2P payment solutions for the global payments industry Orbiscom, which is now owned by Mastercard, was one of the first companies to introduce virtual credit cards, and the number of virtual credit card providers has skyrocketed since.
Virtual credit cards work just like regular credit and debit cards. The only difference is their existence is limited to the digital realm—no piece of plastic is necessary. Such cards have all the details required for use, including a 16-digit number consisting of a BIN (bank identification number), account number, and check digit, an expiry date, and a CVV2 or CVC2 three-digit security code.
Initially, virtual credit cards were marketed chiefly as a way how consumers can improve their security and privacy when making online purchases. In recent years, however, they have gained the interest of B2B companies, which use them as a far more cost-effective alternative to company-issued cards or cash advances.
“One of the big areas of opportunity for the B2B payments industry is moving upstream into the accounts-payable process, where corporations are making decisions on how to pay invoices,” said Tad Fordyce, Visa head of global commercial solutions. “Visa has virtual card products that address this opportunity, and one of the challenges we face, as checks are being displaced by electronic payments, is we want to make sure that Visa’s virtual card solutions are present and available for the corporates to use at that time of the payment decision.”
According to Visa, nearly half of all corporate payments are still paid by check, but this is something that the American multinational financial services corporation would like to change with its Straight Through Processing solution.
As convenient as virtual credit cards may be for their users, they are often a major hassle for businesses that, knowingly or unknowingly, accept them.
Issuing a refund for a purchase made with a virtual credit card tends to be difficult. While refunds for purchases made with a traditional credit card are made directly to the account that was used for the original purchase, most virtual credit cards expire a long time before a refund can be issued.
As a result, merchants are sometimes forced to provide a cash or store credit refund even if they would prefer to simply send the money back to the original account.
Another major problem with virtual credit cards is verification. Car rentals, hotels, and many other businesses require a physical swipe to verify an online reservation. In some cases, the solution is simple: charge the customer upfront. However, most businesses still insist on a physical credit card being swiped upon check-in to cover incidentals.
Healthcare providers also have mixed feeling about virtual credit cards. According to one hospital representative’s report given before the Department of Health and Human Services’ National Committee on Vital Health Statistics Subcommittee on Standards, some health plans are automatically using virtual credit cards to pay claims, resulting in significant banking charges and administrative work for healthcare providers.
It is possible to reliably detect virtual credit cards using our BIN database. Look at the following example of a record from our database:
529923;MASTERCARD;MONETA MONEY BANK, A.S.;DEBIT;VIRTUAL;CZECH REPUBLIC;CZ;CZE;203;;
The fifth parameter is the category of card, which is virtual in this case. The other parameters cover everything from the card’s brand to the issuing organization to the BIN number itself.
With our database, you can quickly and easily detect virtual credit cards, so you can either avoid them altogether or take extra steps to ensure that they will not cause you problems.
