You may have heard the term, “masked credit card” lately. Since it is a relatively new term in the credit card world, we wanted to explain what they are and how they work. A masked credit card is sometimes called a virtual credit card. When you mask your credit card, you get a new unique credit card number, expiration date and security code that you can use to make purchases without ever exposing your real credit card details. When you use a masked credit card, the transaction will charge your real credit card or debit your bank account without ever exposing your data to potential breaches or fraud. In other words, a masked or virtual card is provided by a digital service used in conjunction with your normal credit card. To online sellers, a masked credit card looks and operates the same as a regular credit card. Practical Usage
We provide credit card processing for thousands of limousine companies across the United States. Limo companies frequently provide credit cards to other limo companies to keep on-file when they share an affiliate relationship and trade business back and forth. The on-file card is intended to pay for trips that are brokered. However, these on-file cards are frequently compromised. A separate masked card could be provided to each affiliate so if there is any compromise, it is clear who did it since they are the only ones to have that unique card number. Depending on your needs, you can use a masked card for multiple payments or treat it like a “burner card” and use it for a single purchase. You can put a spending cap on any new card number you create as well as providing a specific expiration date. This solves a big problem for this particular industry.
The Need
In a Pew Research study completed in 2019, nearly 3 out of every 10 people in America experienced an identity theft. The following year, the pandemic arrived, and online sales accelerated dramatically during the lockdowns. As a result of the increased number of transactions completed online, the number of fraudulent transactions jumped up exponentially as well. Masking a credit card for online transactions is considered safer because you’re only providing your real credit card data to one single company. While you might feel secure shopping at a store like Target or Home Depot because of their popular brand names, both have suffered serious data breaches that caused card numbers on file to be exposed and sold on the black market.
One-Time Use
You might be shopping on a website that doesn’t take security seriously. You can generate a one-time credit card number to make your purchase. After you use that number once, it is no longer valid – anywhere. Even if fraudsters get their hands on it, it won’t work. Keep in mind that no solution is foolproof.
If you don’t use that one-time number right away and it is stolen before it expires, someone could complete a fraudulent charge only up to the limit that you assigned to the virtual card number.
Business Usage
While we outlined one business use above, companies can issue virtual card numbers to employees with set spending limits, expiration dates, one-time use parameters and more. If you use a credit card for a recurring bill, you can issue a virtual card to pay for things like newspaper subscriptions and membership dues.
The Protection
If your masked card data is compromised, a crook still won’t have access to your real credit card which may have a much higher credit line than the one assigned to your one-time purchase card. Virtual cards offer consumer privacy on a level that has never existed. Many companies glean information about their customers from their credit card. As an example, merchants can purchase lists from American Express that include specific data about their cardmembers. Because a virtual number has no data, you can avoid telemarketing calls, junk mail and spam.
Data Breach Protection
If a business is hacked or customers data is leaked by a rogue employee, users of masked cards have peace of mind knowing their true credit card information is safe. This kind of protection is becoming even more important in a world where “card not present” (CNP) fraud is occurring more than ever. As more purchases take place online, CNP fraud is becoming a bigger problem. A recent report by the Federal Trade Commission indicates that CNP fraud is 81% more likely to happen online than point-of-sale card fraud. With data breaches also becoming more and more common, it is estimated that more than 80% of all credit cards issued have been compromised in some way. This is one reason that we sell data breach protection plans at affordable prices. It can cost a merchant dearly if they experience a breach.
How Do I Get One?
There are many companies such as Privacy.com, figleaf.com, IronVest and Apple who sell this digital service.
