This virtual card creates a single-use number unlike the fixed number of credit or debit cards

Manipal Technologies in association with Miri Systems have created
Virtual cards which are based on a patented process of creating a dynamic single-use number that looks and works like a credit/debit card number.

The virtual card reduces the risk of payment fraud by removing sensitive consumer credit/debit card data from the payment network. The original sensitive card numbers are replaced with dynamic numbers and cannot be used by a hacker to perform additional transactions.

Abhay Gupte, MD and CEO of
Manipal Technologies interacted with
The Hindu on this new entrant in the rapidly growing segment of digital banking. He talked about how the new technology works and how it is gaining momentum due to its ease of use and the security it offers to prevent fraudulent transactions.

Edited excerpts from the interview below:

Can you please tell us what exactly is a virtual card and how does it work?

Gout: The virtual card is a fast, easy to use and highly secure way to make payments for e-commerce and contactless transactions.

It works like any other debit or credit card transaction. However, the card is based on a patented process which creates a single-use dynamic number that changes with each transaction unlike a debit or credit card number which remains the same for all transactions.

Users can generate the virtual card through a mobile app by clicking a button at the time of transaction and submit it for payment processing as per convenience.

How can this service reduce fraudulent transactions?

Gout: Virtual cards create a dynamic, temporary use number that matches a physical debit or credit card. Fraudsters do not have access to the real number because the real number remains off-net and different numbers are generated for each transaction.

Read also | After Credit Awareness Program, Banks See Alarming Increase in Efforts to Dupe Customers

The dynamic number can also be generated offline, providing zero third-party access to the generated number algorithm. The user’s confidential credit or debit card data is also removed from the payment network.

Even a lost or stolen phone cannot pose a risk of debit or credit card misuse because the app is PIN-secured and the algorithm self-destructs on the third unsuccessful attempt.

Can you please give us some use cases?

Gout: Manipal’s virtual card solution is ideal for e-commerce transactions, contactless POS transactions, cardless ATM withdrawals.

Banks can also personalize their communication with personalized content through virtual cards for promotions.

Which banks can benefit from this service?

Gout: Any card issuer (debit/credit/prepaid cards) wishing to offer a safe, secure and convenient solution to their customer can benefit from this service.

With this, banks can provide flexibility to their cardholders by generating virtual cards as they wish. The physical card or the original card remains under the control of the bank and the customer.

How will technology benefit banks?

Gout: Technology will help banks mitigate risk, gain market share, and increase transaction volume and revenue.

Banks can also reduce card printing, logistics and operational costs. This will reduce the bank’s carbon footprint by eliminating plastic and paper.

The solution can be deployed quickly to customers and reissue is also instantaneous.

Consumers are also hungry for a secure, simple and easy-to-use payment method.

What is the current trend on virtual cards?

Gout: The virtual card market was valued at $188.61 billion in 2018 and is expected to reach $739.77 billion by 2025, growing at 21.56% annually. With the growth in the adoption of digitized payments, the market for virtual cards is on the rise.

The pandemic has also forced us to adapt to digital transactions, as hard surfaces like plastic or paper can be potential vectors for the virus. The increase in cybercrime and online fraud has also accelerated its acceptance.

Credit card fraud has seen unprecedented growth in recent months and is one of the fastest growing forms of identity theft. Reports of credit card fraud jumped 104% in early 2020 compared to 2019.

Do you think Tier 2 and Tier 3 cities have been a major driver for the growth of digital transactions in India?

Gout: Despite the pandemic, Tier 2 and Tier 3 cities have seen massive growth in the adoption of digital transactions. This has led to several malicious activities especially among the oblivious users, creating an urgent need to introduce such technology.

Read also | “Secure digital payments are an imperative”