Virtual Account Numbers: Added Protection or False Sense of Security?

As e-commerce continues to grow — and more people conduct business, pay bills, and shop online — the number of security breaches and stolen consumer account numbers also continue to rise.

Everyone is vulnerable, even the “unhackable” Equifax, who was supposed to be protecting sensitive consumer information from the hackers.

When the biggest companies are at risk of a security breach, what does that mean for small businesses?

Is there a better way to protect data and secure information in cyberspace?

Virtual account numbers may be the best, better-than-nothing security solution available.

A virtual account number (VAN) is an alias for a credit card.

It functions as a temporary number that an online shopper uses for a single or limited number of transactions.

The VAN has an expiration date, too, so it can’t be used past a certain deadline.

The idea behind consumers using virtual account numbers is that a randomly-generated temporary number is used for a single specific purchase, and then it no longer exists.

Some issuing banks allow the cardholder to set a spending limit rather than a time limit on the VAN, so when the limit is reached, the number disappears.

Are virtual account numbers an added layer of protection or a false sense of security?

Although an imperfect solution, a VAN does add another layer of security compared to repeatedly using the same account number for online purchases.

And, as a consumer, or a merchant trying to minimize chargebacks, isn’t it much better for a security breach to occur on a temporary account number than on the one that’s linked directly to a bank account or credit card indefinitely?

We think so.

How do virtual account numbers work?

Cardholders have the ability to opt-in to use a virtual account number if banks or credit cards offer it.

At the time of an online purchase, the credit cardholder usually has to create a username and password with their issuing bank.

Next, the issuer creates a randomly generated, “stand-in” card number that functions like your actual credit card during card-not-present transactions, which is anytime you make purchases online.

It doesn’t appear that there is an easy way – or any way for that matter – to trace the temporary credit card number back to the real account number or any personal data attached to it.

And, if it was somehow hacked, the VAN is only good for a short time or a limited number of transactions.

Again, an imperfect system is better than nothing when it comes to cybersecurity and protecting sensitive data during online transactions.

There are still some bugs in the system.

VANs work best with online and other card-not-present transactions.

While a virtual account number does seem to be the best way to protect online shoppers and other cyber transactions, it’s not effective for in-person purchases.

Any time a customer swipes a physical credit card, the actual card number is out there for hackers to potentially discover.

Avid online shoppers who generate a VAN each time they shop stand to benefit from this type of security more so than in-person patrons.

Returns could be a challenge with a virtual credit card number.

This could be an issue for both the consumer and the merchant.

Typically with online purchases, refunds are credited to the original account that was used for the purchase.

If the virtual card number disappears and the merchant has no record of the real card number, returns could become rather complicated and end up as chargebacks.

Another potential problem arises when consumers need the same credit card for both the online transaction (like a hotel reservation) and in person.

If you reserve a room with a VAN and then present that credit card upon check-in, does the merchant know what to do?

The bottom line is more security.

Even though VANs may not be a perfect system, for virtual consumers and merchants with e-commerce businesses, it may be the best security option at this point in time.

While financial institutions and merchants work out the kinks, a virtual account number still adds another layer of security to the risky world of cyber transactions and hackers.

Protect your business with the latest merchant security updates.

The best thing you can do to protect your business and your customers from hackers is to stay up to date with current security practices in all your credit card processing systems.

When you partner with the financial experts at MyWatchmen, we’ll conduct a thorough analysis of your merchant accounts and alert you to any areas that are vulnerable to a potential security breach.

We’ll work with you to ensure that you have the most secure network possible so you can protect sensitive cardholder data, minimize chargebacks, and avoid fines.

When you’re on our watch, your accounts will have the latest security standards in place, and if we ever notice suspicious activity, we notify you and take action on your behalf.

We’ve been working with merchants just like you for more than 10 years providing chargeback support, technical support, PCI compliance, and top-notch security.

If you don’t increase your bottom line, you owe us nothing for our services.

Contact us today to learn more about becoming our partnering with MyWatchmen as your best defense against cybercriminal activity.

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