What Is a Digital Credit Card?

Despite concerns of credit and identity fraud, the credit card industry has been quite successful. As of 2010, more than one credit card company is working with banks to develop what are known as digital credit cards that may deter fraud.


Digital credit cards are equipped with a miniature computer that creates a new credit card number each time the owner makes a purchase. Because these numbers are one-use only, owners must also use a personal identification number, similar to those used with a debit card, to complete the transaction.


Like a traditional credit card, the virtual credit card allows users to purchase services or goods online, in retail stores and in other venues that accept credit cards. Consumers can purchase goods without needing to have cash on hand.


Credit card companies hope that digital credits cards will reduce card fraud. Even if someone were to discover the temporary credit card number, it will no longer be useful as soon as the owner completes the transaction. Furthermore, thieves cannot use a digital credit card without knowing the owner's PIN.


Although banks and card companies such as Visa had focused on European countries such as the United Kingdom, Switzerland and Italy in the mid 2000s, sources such PCWorld speculated that digital credit cards would appear in the United States as well. However, digital credit cards have yet to become prevalent in July 2010.