What's the deal with single-use credit cards?

Question

How do I learn more about the one-time use credit cards for shopping online?

- Jan

Answer

This question was answered on December 1, 2004. Much of the information contained herein may have changed since posting.

The somewhat irrational fear of shopping online, for the most part, has been created by lack of understanding.

The act of physically typing in a credit card number at a website is not any more dangerous than verbally giving it to a stranger over the phone for a catalog purchase.

In fact, some would argue that the fact that no human beings are involved in the online transaction makes purchases potentially safer than traditional human assisted transactions.

The real danger with most any transaction is in what happens after you give your credit card number, whether it was through a website or to a scruffy waiter in a dark restaurant Most large companies store information on their customers in very large databases that have, at times, been compromised.

To help consumers feel better about any kind of transaction, many banks now offer single use credit cards as a method of protecting their customers from credit card fraud.

Also referred to as a ‘substitute’ or disposable card, it can only be used once because it has a ‘virtual’ account number assigned to it.

Many credit card companies and banks offer this as a free service for their customers, so start by checking with your financial institution of choice.

Depending upon the company, the virtual card numbers can be used for a single purchase or for a single vendor on a recurring monthly basis, for items such as a utility bill.

In all cases, the merchant never gets your real account number to store in their database, so even if someone does break in and steals the information, your transaction information is worthless to the thief.

There are situations where making a purchase with a one time virtual card is not a good idea If you make a purchase like theater tickets, you are generally required to present the card at the will call window Since the account is virtual (it only exists online), you don’t have a physical card to present to merchants, so make sure that it is not a condition of the transaction.

In most cases, you will download a program from your card issuer or bank that allows you to generate the virtual card number, list the intended merchant and then create a limit and expiration date all on your own home computer.

Whether you use a standard credit card or single use credit card, the same safety rules apply for online shopping:

- Make sure that you are on a secure site (look for “https:” instead of the normal “http:” in front of the web address and a yellow lock at the bottom right corner of the page) before submitting your credit card info.

- Check the Privacy Statement link to see how the company intends to use the personal information that you are about to give them.

- Make sure that you can find a physical address (not a P.O Box) and a phone number in the contact section before you make your purchase in case you have a problem later.

- Be sure to print a copy of any online receipts so that you have a paper copy of the transaction in case there is a problem later.

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Author

Posted by Ken of Data Doctors on December 1, 2004