LITTLETON, Colo.—A new type of payment card is emerging—one that isn’t plastic or tucked inside a digital wallet.
“Burner” prepaid cards—one-time use digital cards that are paid for or tied to another card, and often locked into one merchant—are in their infancy. But one expert says that situation won’t last long.
“These cards are something we will see more of in the next year,” predicted Stacy Jensen, prepaid product manager at CPI Card Group, who thinks the digital cards not only fight fraud but present an opportunity for credit unions to better serve their members and drive prepaid programs.
Also called “virtual cards,” a consumer goes online or through a mobile app and creates a disposable credit card number, paid for by one of their current cards. The one-time use cards can also be set to recur for things like monthly subscriptions or bills.
“Let’s say a credit union member wants to shop online but wants to protect their primary credit card from fraud,” said Jensen. “Now they can create a card that does that for them. If a fraudster were to steal this virtual card information, not only would it not be connected with the person’s primary credit card, the data would be useless since these cards are one and done.”
Similar To Tokenization
Jensen compared burner cards to how tokenization works.
“This is an extra line of defense in front of your card,” she said.
Jensen said CPI Card Group offers an open-loop prepaid card for one-time use shopping.
“We have been in many discussions (within the payments industry) about the virtual cards,” said Jensen. “This product is really being talked about.”
Jensen, again, stressed the card’s fraud and business benefits.
“Right now, most members have to go into the credit union to pick up a prepaid card, or they can go online, complete the request, and wait for one to be shipped to them,” noted Jensen. “With a virtual card, the member just goes online and gets the card right then. No wait. This is another channel for credit unions to deliver prepaid cards to their members. Great convenience, ease of use, and it’s all seamless.”
Jensen sees the demand for the virtual cards growing quickly among consumers, something that she thinks credit unions need to get out ahead of.
“From the credit union’s standpoint, they begin offering virtual cards soon and they get a leg up on the competition. And, they offer a new, convenient payments channel that they don’t have today. It’s a solid way to increase prepaid card revenue,” she said.
Big Potential?
Jensen reiterated that virtual cards are emerging, and their security feature is appealing as crooks focus on card not present fraud as the U.S. migrates to EMV.
“Yes, this is still in its infancy, but there are a lot of discussions going on for potential use cases,” Jensen said. “I think that over the next nine to 12 months we will start seeing the marketplace adopt this payment form. Consumers want to help in the fraud fight, this is one way for them to do that.”
Two startup companies offering the virtual cards are Privacy.com and Final.