Is Virtual Credit Cards the Future of Credit Card Payments in India?

By Debasis Mohanty . April 01, 2024 . Blogs

Digital payments have been on the rise in India since 2017.

  • -From 2017-2023 digital payments rose at a CAGR of 45% with a valuation of 10,998 crores!
  • -The total payments done by cards, both credit and debit, were around 17.02 trillion INR.
  • -As per a report by Statista, the number of credit cards will reach around 44 million by 2025.

All such statistics indicate that the future of credit card payments and overall digital payments is on the rise.

Technology has taken the digital payment setup one step ahead, and now the digital age is noticing something called virtual credit cards. The global virtual credit card market was valued at 13.31 billion in 2022. The market is going to grow at a CAGR of 20.9% by 2030.

In the Indian market, Reliance Communication and HDFC Bank launched India’s first virtual credit card back in 2008. Since then, many options have emerged in the market, marking its strong presence in the country.

What are virtual credit cards, and can their prominence rise with time?

According to a news report, India is facing a lot of digital payment fraud cases. In 2023, around 13,530 cases were registered, out of which 49% were related to digital payment via card or internet. To solve this issue, many campaigns have been launched to help Indian consumers become aware of online fraud, but are there any safer payment options available?

Well, yes. Virtual credit cards are a safer alternative to normal credit card payments. These are virtual versions of your credit card, and for any payment, you have to use the dynamic credit card information at the time of the transaction. In normal credit cards, the card number is static but in virtual credit cards, this static information changes with each transaction. With normal credit cards, there is always a chance of information theft, data breaches, etc. And if anything happens to the card or the associated information, the only way to solve the issue is by blocking the card.

The payee is at a lower risk now that virtual credit cards have been introduced, as temporary information can be easily used through banking applications. With so many security features and being user-friendly, virtual credit cards are a great tool for tech-savvy future users.

Advantages of using virtual credit cards

·       Enhanced Security

As previously mentioned, virtual credit cards provide increased security, which is the primary need of a nation that depends largely on digital payments. It gets easier to negate the likelihood of losing your credit card and suffering financial loss when you use temporary information. There are several ways to improve the security of a virtual credit card: one can generate new card numbers for various stores, erase previously generated card numbers, or lock cards while they are on the go. This makes it possible for the user to hold all the power, which makes the entire experience enjoyable and secure.

·       Technological Superiority

With virtual credit cards, people can access the information on their phones, which is a technological advantage. These cards have the ability to be connected to digital wallets, which facilitates transactions while on the go. It is one of the safest credit card payment methods because it requires fingerprints, passwords, and multi-factor authentication to access the data. In addition to location tracking, users can also set up real-time transaction alerts, which makes it simple to follow any unwanted requests or requests resulting from data breaches.

·       Convenience and Ease

Modern consumers prefer to avoid using cash or credit cards, which is why virtual credit card technology is so widely used. These cards are a great way to make purchases online because of how simple and convenient they are to use and because of their integration across various applications. In situations where payment is required but the recipient is unknown, these are the best options for paying riskier accounts. This makes it possible to check the risk and rule out any potential for hacking with a one-time transaction option.

·       Budgets and Limits

A person can budget their minimum expenditures by using virtual credit cards. This is a fantastic choice for frugal consumers because it can have features like minimum spend limits for any merchant.

Skepticism behind using virtual credit cards

Utilizing virtual credit cards is a slow trend, particularly in India, where a greater proportion of people live in rural areas. In many places, exchanging money with paper money is still thought to be preferable. The issue of acceptability and availability may slow down the possibility of virtual credit cards’ explosive growth in India. Other concerns that may cause skepticism about the use of virtual credit cards include network accessibility, smartphone accessibility, and the convenience of digital payments.

Additionally, there are a lot of laws and guidelines surrounding the introduction of virtual credit cards, so options are limited.

Virtual credit cards are also not very well-known or widely used in India for a number of reasons, the major among them being consumer ignorance. On the other hand, the growth trajectory indicates that a transition may occur, like the boom in digital payments.

The future of virtual credit cards: Acceptance and growth

A virtual credit card could be a wise decision in a nation like India for one reason – There is typically a lot of plastic waste generation year after year and a whole new world of environmentally friendly payment methods becomes available with virtual credit cards.

India is a developing nation, so it is not too difficult to accept new payment methods—the rise of digital payments during the pandemic is one example. Virtual credit cards have a bright future in India, but it will take a lot of knowledge exchange and a strong belief in the increased security they offer for a complete transition. When it comes to businesses, this is an ideal way to reduce the carbon emissions from the value chain and reach sustainability goals.

We at Verinite simplify the payment process for financial institutions. By accelerating the integration of virtual credit cards into your business model, we can assist in pushing the sustainability wagon. Get in touch with us to learn more about our services.

Debasis Mohanty

Debasis heads the delivery for all client engagements at Verinite. He has a long track record of delivering high quality, responsive, secure and cost-effective business and technology solutions in BFSI domain. Outside his work, he is an amateur animator, a sports enthusiast, a voracious reader and a Trivia buff.

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