Discover Kills 'Disposable' Credit Card Numbers


NEW YORK (MainStreet) – Ever hear of "single use" credit cards? Also known as disposable or virtual cards, these credit cards act as a secure alias for your real credit card number.

The idea behind them is fairly simple: You log onto your credit card account, sign up for a virtual card number, and you’re given a new account number that allows you to shop online without using your actual credit card number. In most cases, the number can only be used once, and you can apply for another temporary number to make your next purchase.

If an online fraudster tries to hack into your credit card account, good luck to him – he’ll only get the temporary number, not your real one. Consumers also use temporary card numbers for those ubiquitous “automatic enrollment” purchases (like for magazines or gym memberships) where money is withdrawn from your bank account each month. Expiration dates, chosen by the cardholder, thwart a company from charging your credit card if you don’t want the service anymore.

Big financial firms like Bank of America (Stock Quote: BAC), and Citibank (Stock Quote: C) offer the service and, up to this week, Discover (Stock Quote: DFS) offered a disposable credit card program, too. But now it looks like Discover has pulled the rug out from under its temporary card number program.

According to the Consumerist blog, Discover sent an email to notify customers that it would end its “Secure Online Account Number” program on September 8, citing existing security features of Discover credit cards.

“In light of these increased security measures we will be discontinuing the Secure Online Account Numbers program effective September 8, 2011,” the company’s email reads. “Please remember, you're always protected whenever you use your card with $0 Fraud Liability, so use your card with confidence, as you're *never* liable for unauthorized purchases - online, offline, anytime, anywhere. Again, thank you for your continued loyalty.”

Discover hasn’t explained specifically why its disposable card number service has been deep-sixed, but it could be that the company decided it wasn’t really a revenue generator, and that it would be cheaper to simply cover any unauthorized purchases via its regular liability program.

No matter what, Discover is getting out of the disposable card number market. The big question now is, will other credit card companies follow suit?

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