By Trevor Clawson

There are currently more than 160 million credit, debit and charge cards circulating in the UK. But just as cards have made it easier for shoppers, they also provide multiple opportunities for fraudsters. The same card that sits in your pocket – or the numbers that it contains – can be used by a thief to make purchases or withdraw cash.

But now Revolut an alternative banking and payments company, established in 2015, has launched what it describes as a Disposable Credit Card aimed at reducing fraud risk. Announced this week, the ‘virtual card’ effectively destroys itself after every purchase, leaving no trace of the all-important numbers. Because there are no permanent card details, the potential for fraud is greatly reduced.

 A Live Problem

The company is addressing a live problem. Banks and card companies have progressively tightened their security processes over the years and today they claim to stop more than 65% of attempted frauds. But while credit card fraud is falling huge amounts are still being stolen.

For instance, figures published by the financial services industry trade association, UK Finance in February of this year revealed that payment card fraud fell 8% in 2017 from the previous year while card spending rose by 7%. However, despite the decline in criminal activity, the value of losses totalled £566m. Fraud remains a serious problem, both for banks and cardholders.

There are various types of fraud, but according to Revolut, the greatest risk is attached to situations where there is no physical check on the card – for instance when a card user is buying goods online and simply keying in numbers. This is so-called card-not-present (CNP) fraud.

“Fraudsters can take advantage of this type of transaction by positioning themselves between you and the merchant while you’re using the card online in order to ‘phish’ for your card details,”

said Rob Braileanu, Content and Community Manager at Revolut.

“And once your details have been collected, the hacker can then clone them into a physical card or simply use them to pay for purchases.”

Revolut says it can prevent this kind of fraud through a system where new card numbers are generated (and the old numbers dissolved) whenever transactions are made.

How Does it Work

Revolut’s virtual card can be created within the company’s app. Once signed up with Revolut a user can generate a card, which contains all the numbers necessary to allow an online purchase to go through. Every time a transaction is carried out, the system detects the payment and subsequently erases the card details, replacing them with new ones.


What You Can’t Do

There are limits. The Disposable Credit Card is available to all Revolut premium account holders but if you are planning to go on a shopping spree, this is probably not the option for you as the system limits the number of transactions to just five a day.

Nor is this a viable solution for anyone wanting to sign up for a service where payments are taken using the card numbers on a regular basis. So you won’t be able to sign up for Netflix or Now TV using a Disposable Credit Card.

Perhaps that much is obvious, given that regular monthly payments will require a retailer to have a record of an unchanging card number. But users should also be aware that if a hotel asks for card details on arrival – to cover any unbooked extras, such as drinks from the minibar – it won’t be possible to use the Disposable Credit Card.

So this is really a tool for people who have at least one other – more conventional card – at their disposal. Revolut’s new solution can be used, perhaps, in the majority of situations, creating a more secure transaction environment but an alternative will be required to cover the whole spectrum of modern payment card activity.

One other possible worry concerns returns. In order to refund money retailers and other vendors require card details, which of course won’t exist after a purchase has been made. However, Revolut says that in these cases the purchase can be checked against records and the refund honoured.

As Vlad Yatsenko, Co-Founder & Chief Technology Officer at Revolut sees it, the Disposable Credit Card is part of a process of necessary innovation as the company strives to build market share in a financial services market that is still dominated by banks.  

“While fintechs generally offer a better service than traditional banks, they still have a long way to go in order to build trust and confidence with consumers. Instead of matching what the larger institutions are doing, we are changing the game entirely by introducing disposable virtual cards and promoting existing features such as location-based security and the ability to freeze/unfreeze cards,” he said.

And he points out, the renewal of cards does not mean the world is heading for an imminent shortage of 16 character card numbers.

“It will take approximately 800 years before we begin to run out of 16-digit card numbers, so we view disposable virtual cards as a sustainable, long-term solution to tackling online card fraud. And by automating this process, the customer experience is instant and stress-free.”

The Card Fraud Spectrum

Card fraud covers a wide spectrum and one that includes skimming (where a device collects electronic information that allows the card to be cloned), theft of the physical card, and the aforementioned card not present fraud. In addition, there is the problem of identity thefts where thieves use personal data to open card accounts under the victim’s name.

Using a virtual card of any kind will prevent the skimming of card data (which normally requires a physical card to be inserted into a reading device) but the Disposable Credit Card is probably most useful in terms of card not present situations.

Thieves steal the codes and numbers on cards in many ways. Often physical cards are stolen and the numbers and security codes sold online. A little closer to home, must of us have received phishing emails that try persuade us to reveal card details, which are then harvested. Equally fraudulent e-mails may contain malware designed to harvest credit card information.  Businesses also store the card details of customers, making the numbers vulnerable to hackers who penetrate their systems.  However, most businesses have systems in place to prevent card details being stolen.

So revolut’s Disposable Credit Card provides another means to prevent, or reduce the scope, for card not present fraud. Uptake by customers will probably depend on how serious they perceive the problem to be.