"virtual credit cards are actually a great interim solution that give you back some more control over your finances"

 

Credit cards are a notoriously insecure means of payment. 

Credit card fraud remains the most common type of identity theft in the United States.

About 11 billion dollars worth of losses due to credit card fraud.  The vast majority of that is online.

It's just a piece of plastic with a number on it and anyone who knows that number can make a charge to your account.

As we go about doing our business online we tend to give away our credit card information to so many different companies and that really spreads our risk across a lot of different places instead of just our bank.  --Josh Summers

Josh Summers teaches people about security products in the digital age.

It makes me a little and easy whenever I am handing out my information to all these different places.  --Summers

And we do it anyway because we like the convenience.  But there are a bunch of companies that offer things called virtual credit cards that allow you the convenience of credit cards well giving you more privacy and control of your purchases, like 

Premium, PRIVACY, Capital One, and Wise.  They work kind of like a VPN shielding your payment information from merchants.

1:05 I'm not giving out my actual banking information.  I'm not giving out my actual credit card or debit card number. I'm masking it with one that gives me a little more control.  --Summers

1:18. Increased privacy is a big reason why someone might want to use a virtual credit card.  Maybe you don't want your payment information to be a way that marketers can Target you or perhaps you just don't want to reveal your home address to people you don't know.

1:32. Not only are we masking that credit card number, we also have the ability to mask our address, our zip code, and our name if we wanted to.  You can use any name, any address, any zip code, and they will Auto approve that charge.  --Summers

1:46. I decided to give this a go and used privacy.com to purchase an online dance class with a fake name and a fake address it was a virtual product so there's no reason I should have to give them my home address and second it said in their terms and conditions that they were allowed to sell my data to 3rd parties.  No thank you.  The purchase worked a treat: one less company harvesting my data!  But the virtual card company itself is still collecting your data.  The great thing about Privacy.com, the service I used, is they promise never to sell user data in any capacity, and a lot of these virtual credit card companies have similar policies.  Another reason you might use a virtual credit card is a layer of insulation from the world of online fraud,

"How could someone get a hold of your credit card number?"  -- Joey Tribbiani from Friends 

2:31. We've become so inoculated to using our credit card that now we almost trust anybody with it.

2:36. But if this number falls into the wrong hands, 

2:39. . . . they will take you for everything you have without any compassion whatsoever.

You're basically saying when you have this number you have the ability to pull money from my account and yet we freely hand that number out to almost anyone.  Virtual credit cards allow you to put all kinds of parameters in place that stop those people from pulling money from your account without your permission.

2:58. I can say that this is a one-time use card. I can pause or cancel those cards at any time once I use that card once with a merchant it gets locked to that merchant. -- Summers

3:09. For example you might create a virtual card to pay your Netflix subscription.  

3:13. That card is locked to my Netflix account and it cannot be used anywhere else.  Not only that, but my liability is limited to $9 per month because that's what I've set it at.  Netflix cannot charge any more than that.  Or perhaps, it's just a one-off payment.  I had some yard work done on a house of mine the contractor basically asked me, "Can you please just email us your credit card information?" and when I sent my information I made it a single-use credit card and for a specific amount for the invoice.  So once they hit the card for that amount, the card was closed 2 minutes later.  Add after they charged that $800, anything else that they want to charge on top of that will also get declined.  

3:52. Even if someone gets access to the email and the card number it will be useless to them but it's not just sending credit card numbers over insecure methods like email that should concern us it's how the company stores that information once they have it.

4:06. We are giving all this information to companies that we may or may not be really confident about their security measures . . .  Summers

4:14. the small businesses your local pizza chain or your dentist that are also collecting your payment data you know they don't have necessarily these big it departments to make sure that their infrastructure is secure. --  Julie Conroy, Research Director, Aite Group's Fraud AML Practice

4:26. Instead of spreading our risk across a lot of different companies getting our credit card information all those were kind of trusting one company

4:33. Privacy.com, for example, takes great pains to store your data safely using things like password hashes, split key encryption for sensitive information, and isolating data.  Most of these companies have similar practices, but again make sure you read the fine print before you sign up.  A third reason why you might want to use a virtual credit card is that it's the best way I've found to eliminate auto-renewals for stuff you don't want anymore or forget about.  A lot of these services depend on you just forgetting that you have a subscription somewhere until you find it on your bill and you're like, "Oh, I better cancel that," by which time you've already paid for another month that you're not going to use.

5:11. Subscription services are notoriously hard to cancel they do this on purpose.

"I want to quit the gym," Chandler Bing.

STAFF:  "You do realize you won't have access to our full service Swedish Spa."

I WANT TO QUIT THE GYM, Chandler.   

I pressed the cancel button, and a little pop-up said, "We're sorry that you are interested in canceling.  You'll have to email this email address in order to continue," and I'm like that is not a cancel.  So what I did is that I went in and I canceled their card, so when they run that charge and find out that it's declined they will stop their services quicker than it would take me to actually do the cancel service.

5:45.  Some caveats about these virtual cards:  let's go back first let's go back to the VPN analogy the same way that a VPN hides your IP from websites you visit but the VPN company has access to everything you visit a virtual credit card hides your sensitive information from Merchants but the company sees everything you do keeping mind that this is not an anonymous service now just because the virtual credit card company knows what you're doing it doesn't mean your bank needs to some virtual credit cards let you choose from a selection of fake Merchant names and how you want your charge to show up on your on your bank statement.

6:22. And they've got a list of like four or five, it's like H&H Hardware, like some random names that you can put on so you can hide it from your bank.

A couple more caveats that I'll mention.  A lot of people like credit cards because they get cash back rewards.  You miss out on those rewards if you're using a virtual credit card.  But some would argue that it's a small price to pay to save you from the inevitable headache of credit card fraud. 

6:49. The other caveat is that I personally think crypto provides better protection in privacy and you get the added bonus of saving money on each purchase if you're using services like Dash Direct or Bitrefill or Purse.io. but recurring payments still I think the crypto doesn't do well at all so virtual credit cards are actually a great interim solution that give you back some more control over your finances.  All in all, the less data you give to the least amount of places online, the smaller your digital footprint and the more control you have over your privacy.  Virtual credit cards are really cool product that I recommend people check out.

7:25  Being able to mask my information kind of add in that anonymous or pseudonymous layer between my actual information and who I'm giving it to me it just gives me a little more confidence as I move forward with my number, my address, and my credit card, whatever.

Find Josh Summers' YouTube channel here.