Data breaches have come to feel inevitable. Everyone expects their credit card information will be stolen at some point and everyone knows at least one person whose information already has. In 2021 alone almost 400,000 instances of credit card fraud were reported to the FTC, making it the most common form of identity theft. Companies are investing millions into making their platforms more secure and ensuring that personal information and credit card data doesn’t fall into the wrong hands. Yet even with these investments, it can be hard for both businesses and consumers to know what to do to keep private information secure. A fintech tool that can go a long way in keeping customer credit card information safe are Virtual Card Numbers (VCN).

This screenshot shows Citi's dashboard for managing virtual account numbers
Citi Virtual Account Number Dashboard

Virtual card numbers, also known as virtual account numbers or simply virtual cards, refer to auto-generated card information that can be used to make purchases without handing out personal card information to every store, website, and browser extension under the sun. This allows consumers to limit who has their card information and how their card can be used. When the worst happens and card information is stolen, VCNs ensure that the damage is limited. Consumers avoid the hassle of cutting up their current card, disputing transactions, and updating the payment method for all their bills. Financial institutions avoid having to cover spending from stolen cards. VCNs make both online and in-store shopping safer and more convenient for everyone.

Several companies are investing in the development of the service. VCNs are already featured at several fintechs, especially with increasingly popular “buy now, pay later” services. Affirm, Klarna, and Afterpay all rely on VCNs for many online and even in-store purchases. Banks are investing too. Our research teams noted in October that Citi revamped its VCN interface and functionality while American Express partnered with Extend to add virtual cards to its small business card offerings. Similarly, Capital One updated its VCN interface this May, while U.S. Bank has partnered with World Travel to develop a new virtual card for business travel.

Perhaps the largest development in the fintech virtual card numbers space is Google Chrome’s recent VCN integration. In partnership with Capital One, Google added embedded support for virtual card numbers on the world’s most popular browser. While many firms offer proprietary browser extensions for clients to use their VCNs, now that Chrome users can save and automatically fill VCN information, the feature will be far more convenient for millions of online shoppers. This also makes VCN implementation easier for businesses. Our research team notes that Google’s move means firms may no longer need to invest in VCN management capabilities themselves.

Our research teams have examined VCN implementation across the financial services industry. Firms have taken many different approaches in creating VCNs. Traditional bank and card companies offer the most features for VCNs. Capital One and Citi both provide extensive virtual card capabilities ranging from customizable expiration dates to daily spending limits and customizable card names.

These two screenshots show virtual card number capabilities from Citi and Capital One
Citi Mobile App Virtual Card Creation Screen and Capital One VCN browser extension

Card functions can vary dramatically. Depending on the firm, VCNs may be designed exclusively for online use, while others can be added to a virtual wallet (e.g., Apple Pay) for in-store purchases. Some VCNs expire after just 24 hours, while others can remain active for years.

VCNs also differ in how they are funded. Most VCNs allow clients to load the card with a certain amount of money. These types of cards are often geared towards single purchases (e.g., Affirm). Other firms allow customers to set a daily or monthly spending limit for their VCNs. For online shoppers, cards may be linked to specific sites, making them perfect for recurring purchases like streaming subscriptions.

These two screenshots show virtual card capabilities from Affirm and Revolut from
Affirm Virtual Card Funding and Revolut Virtual Card Spending Limit

Security is just one of many potential benefits to building out a virtual card product or using one for personal shopping. On top of the many security benefits, VCNs can open up new payment options to consumers and make online shopping cheaper and more convenient. It is therefore no surprise to see banks and fintechs investing in the technology. CI’s researchers expect VCNs to continue to grow in popularity and adoption. Firms would be wise to track the latest trends and best practices in the space.

For more about VCNs and other developments in the financial services industry, check out our Insights section.

Alex Tiro

Alex Tiro is an analyst on CI's projects team.