Thursday, December 28, 2006

PayPal introduces a "virtual" debit card

When I logged into my PayPal account the other day, I was introduced to a new service they are offering. It’s called the PayPal Virtual Debit Card. The service is in Beta and seems to be the answer to concerns people have about buying items online.

Once you sign up for the service, you are asked to download a small program that resides on your computer. When you are on a merchant’s website and are preparing to check out, a small window pops up alerting you that you can use your virtual card. You then have to log in to PayPal and your account number is automatically entered into the merchant’s check-out screen. (This is according to the demo. I have not yet downloaded the program!) The account number for the virtual debit card changes all of the time and cannot be reused. This is one of the safety features that should appeal to buyers. Even if someone stole your account number, it cannot be used again.

The virtual card is a MasterCard-branded card.

Now that I am an eBay seller, I have a balance in my PayPal account that I can use elsewhere — even with merchants who do not accept PayPal. I’m curious what other card issuers will do.

First update: After posting this, I read other articles and discovered that this is not a new concept. American Express used to offer this to their customers, but apparently discontinued it. Others have stated that PayPal offered a virtual debit card before and has either enhanced it or chose to simply reintroduce it.

Second update: I downloaded and installed the virtual card last evening. I haven’t used it yet. What should I buy!?

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