What is a Virtual Credit Card and How Do They Work?

In today's digital world, virtual credit cards are becoming an increasingly popular payment option. These are digital versions of your physical card that exist solely online, offering enhanced security features and convenience without the need to carry physical plastic.

At KOHO, we offer a virtual credit card that's available to all account holders at no extra cost. While it's technically not a credit card (it uses your balance rather than a credit line), it functions similarly for online purchases and digital payments.

What makes virtual cards particularly valuable is their security. Many virtual cards generate unique card numbers for each transaction, helping protect your financial information from potential data breaches or fraud. Think of it as an extra layer of protection for your money when shopping online.

You can easily access your virtual card directly through the app, and for added convenience, you can add it to digital wallets like Apple Pay, Google Pay, and Samsung Pay for streamlined payments.

What is a virtual credit card?

Simply put, virtual credit cards are digital versions of physical cards that exist purely in the digital realm. They work just like your regular cards but with an added layer of security since they don't expose your actual card number during online transactions.

These digital payment tools are perfect for:

• Securing your online shopping experiences

• Managing subscription services without worry

• Making contactless payments

• Protecting your financial information during remote transactions

The beauty of virtual cards is their flexibility—you can create them for single purchases or use them repeatedly for regular services, depending on what you need.

How does a virtual credit card work?

Think of a virtual credit card as your regular card's digital twin—but with its own secret identity! It connects to your actual account while keeping your real card details tucked safely away from online merchants.

Getting started is surprisingly simple. When you need a virtual card, you just hop onto your KOHO app and request one with a few taps. Within moments, you'll receive a unique set of credentials:

• A new card number (different from your physical card)

• Its own expiration date

• A security code (CVV)

While these details look different from what's on your physical card, they're linked to the same account. When you make a purchase online, the transaction flows through this digital card but draws from your actual balance.

The magic happens behind the scenes—merchants only see the virtual card information, while your real card details remain protected. This creates an effective security buffer between your actual account and the various websites where you shop.

How do I get a virtual card?

Virtual cards offer a convenient and secure way to make online purchases without exposing your physical card details.

Getting your KOHO Prepaid Virtual Card

Good news! You don't need to request a virtual card separately - you'll automatically receive a virtual card as soon as you activate your new KOHO account. This means you can start making online purchases immediately, even before your physical card arrives in the mail.

Accessing your virtual card details

On the Web: When logged into your KOHO account online, simply click the eye symbol next to your card to reveal your virtual card details, including the card number, expiration date, and CVV.

In the KOHO App:

1. Open the app and tap on "My cards"

2. To view your virtual card information, tap "See Card Number"

3. Your card details will be securely displayed

Using your virtual card works just like a regular card for online shopping - enter the card number, expiration date, and CVV code at checkout to complete your purchase.

What are the benefits of a virtual credit card?

In today's digital world, virtual credit cards are becoming an essential tool for savvy online shoppers. A virtual card from KOHO offers several advantages that make your online shopping experience both safer and more convenient.

Enhanced Security

Virtual cards act as a protective shield for your actual account information. When shopping online, especially with unfamiliar websites or retailers, your virtual card creates a buffer between merchants and your real financial details. If a website experiences a data breach or your card information is compromised, your primary account remains secure since only the virtual card details were exposed.

Convenient Shopping Experience

You can make purchases online instantly without needing your physical card. This is particularly useful if you've just opened your account and are waiting for your physical card to arrive, or if you're shopping from a location where you don't have your wallet handy.

Greater Control Over Your Spending

Virtual cards put you in the driver's seat of your finances. You can easily lock or unlock your virtual card through the KOHO app or website whenever needed. This gives you immediate control if you notice any suspicious activity or simply want to pause online spending.

Seamless Online Checkout

Your virtual card works just like a physical card during online checkout—simply enter the card number, expiration date, and CVV code. The process is familiar and straightforward, requiring no special technical knowledge.

Are virtual credit cards safer than physical cards?

When it comes to card security, virtual cards do offer some distinct advantages over their physical counterparts. At KOHO, we believe in giving you the tools to protect your finances in today's digital world.

Digital Protection vs. Physical Vulnerability

One of the clearest benefits of a virtual card is that it can't be physically lost or stolen. There's no plastic card to drop at a restaurant or leave behind in an ATM. Your virtual card lives securely in your KOHO account, accessible only through your authenticated app or web login.

Advanced Security Features

Virtual cards create a protective buffer between merchants and your actual account. This separation means that even if a website where you shop experiences a data breach, your primary account details remain secure.

Controllable Exposure

With your KOHO virtual card, you maintain greater control over your financial exposure. If you notice any suspicious activity, you can immediately lock your virtual card through the app or website without affecting any other aspects of your account.

Protected by KOHO

It's worth noting that both your virtual and physical KOHO cards are protected by our robust security measures and fraud monitoring systems. You receive the same fundamental protections regardless of which version of your card you use.

Are there downsides to virtual credit cards?

While virtual cards offer excellent security features for online shopping, they aren't perfect for every situation. Understanding their limitations helps you decide when to use them and when your physical card might be a better choice.

Identity Verification Challenges

The primary limitation of virtual cards appears when you need to verify your identity in person. Since your virtual card number is different from your physical card number, this can create complications. For example, if you purchase concert tickets online using your virtual card but need to show the purchasing card at will-call, you might encounter issues since the numbers won't match.

Potential Issues with Reservations

When making reservations that require card verification upon arrival, such as hotel bookings or car rentals, virtual cards may cause confusion. Many hotels ask to see the physical card used for booking when you check in, which could lead to complications if you used your virtual card details.

Returns and Refunds Considerations

In-store returns for online purchases can sometimes be problematic. Some retailers require the original payment method for processing refunds, so having different card numbers between your virtual and physical cards might create additional steps in the return process.

Planning Ahead

If you anticipate needing to show your card or make an in-person verification for an online purchase, it might be best to use your physical card for that transaction. When in doubt, it's always helpful to contact the merchant beforehand to understand their verification requirements.

Despite these limitations, virtual cards remain an excellent tool for most online shopping scenarios, particularly for one-time purchases or subscriptions where in-person verification isn't needed.