Disposable Credit Card Numbers
February Card Tips - By Rebecca Lindsey, CardRatings.com Senior Reporter
The last few Cardratings.com articles have dealt with
important issues: credit card protection and security, two things that almost
everyone with a credit card thinks about at one time or another. This month,
another topic on secure credit card use: online shopping.
If you’ve ever purchased anything on the Internet, you are
probably a big fan of the ease and efficiency of the purchase, along with the
“delivered to your door” aspect. Despite the recent downfall of many online
companies, shopping online remains very popular. In fact, eMarketer.com, a
research firm that focuses on online trends, predicts online business to total
$65.9 billion in the year 2001, a 57% increase from 2000.
Is online shopping really safe?
Stories of high-tech hackers breaking into company databases
on the Internet to steal customer information (such as credit card numbers)
stop many people from making online purchases. Although these types of problems
don’t happen often, there is an ever-present fear among consumers that the
wrong person may get hold of their credit card number or other private
information.
Because of booming e-commerce and the love affair with the
Internet, there is much at stake for credit card companies should these
problems or fears get out of hand. As you might expect, companies are working
quickly with new technology to stop the problems and calm the fears of their
customers. Their solution? Disposable or temporary credit card transaction numbers.
First introduced by American Express in September of 2000, a
disposable transaction number is a one-time number assigned to a credit card
customer that enables them to make a purchase online. American Express touts
its "Private Payments" program as a system that gives their
consumers peace of mind by making their online shopping experience as secure as
possible.
Private Payments assigns unique random numbers that are linked to a consumer’s actual card account, but the numbers are only temporary and do not reveal any private information. This temporary credit card number is good for one purchase only, meaning that it does no good for someone to swipe that number because they won’t be able to use it after the initial purchase. Private Payments is free to American Express Consumer Cardmembers and Small Business Cardmembers and can be used at all web sites that accept the American Express Card.
Update! As of May 2004, American Express is no longer offering
the "Private Payments" program (more info. here).
Discover
is another company that has ventured into this realm by offering their Deskshop
Virtual Credit Card. Deskshop differs from Private Payments in
that it allows the user to make multiple purchases from the same online store.
For example, each single-use card number is unique to an online store that you
visit and will not be valid at any other store. In addition, you may use the
same number for recurring charges such as monthly bills that you elect to pay
online.
Although disposable credit card numbers are not available
with every company yet, do not be surprised if these types of programs are offered by most
major credit card companies soon. Update! Citibank
is now offering a Virtual Account Numbers program and MBNA
has a similar program called ShopSafe. Regardless of whether you take
advantage of disposable card numbers
, you should always protect yourself with safe
Internet shopping practices. You can find some tips for safe online credit card
use on the Fraudbureau.com
web site. Also, be sure to visit the Scams and Internet Security
section of our site for additional resources.
But aren’t consumers already protected against credit
card fraud?
Recent CardRatings.com articles have reiterated that the
maximum liability for credit card holders in the case of loss or theft of their
credit cards is $50 (many card issuers now even have
"zero liability policies"
in place). So why are programs such as Private Payments needed if consumers are
already protected? The main reason is to alleviate hassle. The business of
contacting your credit card company and explaining the situation, filling out
the necessary forms and making claims can be cumbersome. It makes more sense to
be protected from fraud in the first place rather than after it has taken
place. One more reason? To protect merchants who do business online. Because of
chargebacks from fraudulent purchases, online fraud costs merchants millions of
dollars overall each year.
One more note regarding protection with online shopping.
Although ‘disposable’ credit card numbers are safe to use in most cases,
companies do recommend that some online purchases be made with your actual card
number. These occasions include purchases that require the buyer to present
their credit card in order to receive their purchase, such as the purchase of
airline and movie tickets.
Click here for more credit education articles!
Rebecca Lindsey is a Senior Staff Writer for CardRatings.com. She began writing
articles about consumer credit issues for CardRatings.com in September 2000.
Originally Published February, 2001 (Updated Novemeber, 2004)
Important Note! The information in this article is believed to be accurate as of the date that the article
was written. Please keep in mind, though, that
credit card offers and terms change frequently. Therefore, we can not
guarantee the accuracy of the information in this article. Please verify
all terms and conditions of any credit card offer prior to applying.
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