Google Virtual Cards
Credit cards were invented in a world that is much less reliant on computers and digital communication, and this can be a problem at times. Basic elements of a credit card’s functionality, like the account number, can be a major liability when fraudsters can steal and copy them with ease.
One way to address this problem is by using virtual card numbers that can’t be reused, and Google is now working with issuing banks and card networks to offer virtual cards for use on their devices and software platforms. How are Google’s new Virtual Cards going to work, and what does this mean for merchants?
- What are Virtual Cards?
- How Do Virtual Cards Make Online Transactions Safer?
- How Do Google’s Virtual Cards Work?
- How Can Merchants Benefit from Google’s Virtual Cards?
- Conclusion
E-commerce has been dealing with credit card fraud since its inception. In order for a merchant to process a transaction on a customer’s credit card over the internet, they have to transmit all of the key payment credential data, and if a fraudster can get their hands on that data, they can easily use it to place unauthorized transactions until the card gets reported as stolen—and every fraudulent transaction will eventually turn into a costly chargeback for the merchant that processed it.
Credit card data theft is so widespread on the internet that most fraudsters don’t even bother stealing them themselves. Instead, they buy stolen card data in bulk on the dark web, and use card testing schemes to find out which of the credential sets are still usable.
Virtual cards can protect cardholders by concealing their actual payment credentials and ensuring that the only data that gets transmitted to the merchant is a single-use number.
The only trouble is that not every issuer offers them, but with Google partnering up with Capital One, American Express, and other card brands, they could soon become much more accessible to the average consumer.
What are Virtual Cards?
The term “virtual card” refers to a credit card number that has been turned into an encrypted number that only works with a specific merchant or transaction.
Virtual cards are a lot like the tokenized card numbers that get sent in digital wallet transactions, but the cardholder can use them just like a regular credit card number. The virtual card does not tie back in any way to the actual card number, and cannot be reverse-engineered to generate raw payment credential data.
How Do Virtual Cards Make Online Transactions Safer?
Virtual cards add a powerful layer of protection on top of cardholder account data. If a virtual card number is stolen or compromised, there’s no way for a fraudster to make unauthorized purchases with it.
Instead of securing online transactions with addresses and CVV numbers—which can also be compromised—virtual cards are designed to work only with a single merchant or to expire after use.
Cardholders can use virtual cards with unfamiliar merchants, over Wi Fi and other networks that may not be fully secured, and in other scenarios that carry some risk of eavesdropping or data breaches, and know that they aren’t putting their funds or personal information in danger of being stolen.
How Do Google’s Virtual Cards Work?
Google’s Virtual Cards are currently usable with Capital One and American Express accounts, with more brands on the way. They are designed to make it easy to place secure transactions using Google products like Android devices and the Chrome web browser.
If a cardholder has one of these Virtual Cards, Google will automatically insert the Virtual Card number when the cardholder auto-fills the payment form on a checkout page. The transaction will be made using the Virtual Card number, and the cardholder’s true account number never gets sent to the merchant.
Cardholders can manage their Virtual Card through a portal on the Google Pay website, but it is not necessary to use the Google Pay app to make Virtual Card payments.
Right now, Capital One and American Express are the only card issuers that support Google’s Virtual Cards, but they are working on adding more Visa and Mastercard issuers in the near future.
How Can Merchants Benefit from Google’s Virtual Cards?
Through the use of Google’s Virtual Cards, merchants can benefit from increased customer trust and fewer chargebacks. However, there are a few things you might have to watch out for.
The biggest benefit of virtual cards, whether they’re issued by Google or any other company, is that they prevent real card numbers from being stolen and used by fraudsters. Nearly every act of true fraud turns into a chargeback sooner or later, costing merchants revenue and fees and leading to higher chargeback rates. By using virtual cards, consumers create fewer opportunities for fraudsters.
Virtual cards can also promote higher conversion rates by making consumers feel safer about placing online transactions, especially with newer merchants or ones they aren’t very familiar with.
The downside of virtual cards is that they can complicate some credit card functions, like providing a refund after a product return. The customer might need to provide their virtual card number, or at least the last four digits, in order for the merchant to process a credit.
Since virtual numbers are generated on an as-needed basis and aren’t printed on the actual card, the customer might have a hard time locating it. While they should be able to find it on the purchase receipt or the issuer’s online portal, there is always a danger that customers who have a hard time getting a refund from the merchant might resort to the chargeback process instead.
Conclusion
True fraud has long been a thorn in the side of e-commerce merchants, and despite many successive advances in cybersecurity, it only keep growing in scope.
Innovative solutions will be needed to seal off the vulnerabilities that allow online fraud to continue at such a massive scale, and partnerships between tech companies and card networks might help us get there sooner.
While Google’s Virtual Cards are primarily designed to be used across Google’s hardware and software, the idea itself is platform-agnostic and can be enabled by issuers without requiring buy-in from merchants. A general shift in the direction of virtual cards could greatly reduce true fraud instances and the chargebacks that accompany them.
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