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Money Oct 26, 2012

Virtual credit card reduces online frauds risk

By Bindisha Sarang

Pop-up e-tails are gaining currency, literally and figuratively. And why not, they let you buy everything under the sun, without actually stepping out in the sun. They let you compare rates and offer some superb discounts. Your item reaches you, without you moving an inch. Err.... That may be wrong. Move you will have to, but a tiny stretch-from the bed room or living room sofa to your front door!

Technology has shrunk the world's market place to size of your computer screen. But this very technology, which helps us clinch such great deals with all the convenience in the world, can also easily stab us from the back, by way of online frauds.

Credit card and debit card financial frauds have become so rampant in India that there are chances of you falling prey even if you have taken precautionary measures.

Here is a better way to ring fence yourself from online financial frauds.

Its name varies with banks, but for the sake of understanding, we will stick to virtual card.

What's a virtual card: As the name suggests it's a card which is virtual (not tangible) in nature. It's an electronic card which works in the same way as a credit or debit card and is used for online shopping. This card takes care of your security concerns since you don't need to reveal your physical credit or debit card details while shopping online.

A virtual card takes care of your security concerns since you don't need to reveal your physical credit or debit card details while shopping online. Reuters

Working: All you have to do is register with your bank to generate a virtual card. The virtual card will be linked to your credit or debit card. This virtual card will have a different number than your credit or debit card and is set up using your existing physical credit or debit card number. To get a login ID and password to generate this card online, you have to specify the amount you need on your virtual card. The software will generate a new 16 digit number for the virtual card, which will be different than the physical credit card number. You will also get a different CVV2 number (three digit number at the back of your card) and an expiry date for the virtual card. With these three numbers you can use this virtual card to shop online. In other words, when you use a virtual credit card, your physical credit card details will not figure anywhere online. More importantly, banks do not charge you a fee to generate a virtual cards.

Life of the virtual card: The virtual card is valid for 24 to 48 hours. This varies from bank to bank. The best part is that you can generate multiple virtual cards in a day, but every card can be used only for a single transaction.

Spends: The minimum amount is around Rs 100, while the maximum amount is Rs 50,000 per day. If you've made a virtual card for say Rs 25,000 and you used it to shop online for says Rs 24,000, the unused balance amount of Rs 1,000 is credited back to your physical card account. The virtual card can be linked to credit card as well as a debit card.

Other options: Another option is e-wallet. This is also a virtual card, but which is generated and set up against your savings account. E-wallet too is a single transaction card. You can generate an e-wallet between Rs 100 and Rs 50,000.

Advantages and precautions: The precautionary measures for virtual cards/e-wallets are same as the ones for physical credit card, debit card or net banking. Of course, debit and credit cards have become more secure today with two-factor authentications. But a virtual card and e-wallet let you reduce the risk further. They expose only part of your credit limit to an online transaction instead of the whole limit. For example, let us say your credit card has a limit of Rs 1 lakh and you want to buy a mobile for Rs 20,000 you just make a virtual card for Rs 20,000. And just in case, there is a financial fraud, the remaining Rs 80,000 is not exposed to the fraud. Not many banks offer these services, but most private sector banks such as HDFC Bank (Netsafe), Axis Bank (E-shop, E-wallet) and Kotak Mahindra Bank (Kotak netc@rd) do.

Now with this bit of info, shop safely online until you drop.

by Bindisha Sarang

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