As entire industry sectors wage fierce cyber-battle against internet crooks, consumers continue to be victimized by these criminals, and it’s making them extremely nervous about their data.
“Consumers are increasingly concerned about protecting their payment details from fraud when shopping online,” according to PYMNTS’ November 2020 Next-Gen Debit Tracker® done in collaboration with PULSE, a Discover company. “And they are very aware that their information could be exposed should any of the merchants they transact with get hacked. This is driving demand for virtual cards, digital payment offerings that can authorize purchases without forcing shoppers to hand over sensitive permanent account numbers.”
A slow but steady embrace of virtual cards and other financial products with finer spend controls and fraud protections is altering the face of debit payments, in a good way.
“Virtual cards are expected to facilitate $1.6 trillion in spending this year and $5 trillion in 2025. Businesses and consumers alike are looking for secure, streamlined ways to make payments online, and the pandemic’s challenges have accelerated pushes to find a solution,” the new Tracker states, providing a glimpse into the opportunities for safeguarding the space and keeping consumer confidence high.
Merchants Align Behind V-Cards
Virtual card numbers can’t be copied, and their spend controls make overspending or unauthorized spending “virtually” impossible. For these and other reasons, virtual cards are suddenly hot, as Kelley Knutson, president of prepaid debit card provider Netspend, told PYMNTS.
“Merchants’ efforts to please shoppers have ushered in a wave of virtual card activity in recent months,” per the Tracker. “Netspend observed many more of its prepaid card customers activate virtual wallet capabilities during the pandemic. The company’s overall virtual card spend during Q3 2020 rose 793 percent year over year, while the number of virtual card transactions made by its customers grew 458 percent year over year during the same period.”
With that kind of transaction volume growth, it’s clear that something’s working.
As Knutson told PYMNTS, “we’re seeing more and more merchants starting to support this capability. It’s been [happening] behind the scenes for a while, but during the pandemic, it’s really kicked off.”
“Adoption rates could rise even further in the near future, as more retailers and other venues begin accepting virtual cards. The payment method could become even more normalized if ATM networks were to allow their machines to be used without physical cards,” Knutson pointed out.
Safety In The Virtual World
As is true in the rest of the digital world, remote onboarding presents identity verification problems. It’s a case where virtual cards offer an alternative with more inherent security.
“Applicants often want to get up and running quickly with their new virtual cards, and providers can help them do this securely by initially giving users limited capabilities and then requiring them to go through more intensive authentication measures to unlock more features,” per the November Next-Gen Debit Tracker®. “Providers might offer a fast onboarding experience and permit those who complete it to make virtual debit card transactions below certain values, for example, before removing the cap once applicants have had the time to go through more extensive security steps.”
As it relates to fraud, once again, virtual cards are having a major moment.
“Virtual cards can thwart [fraud] attempts … because the cards can be used without revealing sensitive data,” the new Tracker states. “These tools have the ability to generate single-use codes to authorize each transaction, which users enter into online checkouts rather than providing permanent card numbers. The codes ensure that fraudsters who manage to steal the details cannot reuse them to make future purchases.”
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