What exactly is VCC in cross-border payment?

VCC, the full name of which is Virtual Credit Card, is a digital payment tool. Similar to a credit card, VCC has its own card number, validity period and security code, but exists in digital form. Unlike a physical credit card that has an actual plastic or metal card, some virtual credit cards are even disposable and become invalid after the payment is completed. Even so, benefiting from features such as "card information digitization, no need for a physical card, no geographical restrictions, no identity restrictions, and extremely convenient application process", VCC has advantages such as "strong security, convenient operation, and global availability", and is favored by the majority of consumers, gradually becoming a phenomenal "internet-famous payment product".

In fact, in the field of cross-border payment, the application scenarios of generalized VCC payment are not rare - online shopping, game recharge, purchase of digital products, overseas travel, online hotel reservations, and so on. For cross-border merchants, expenses such as store opening fees, advertising fees, logistics fees, and warehousing fees on e-commerce platforms can also be paid using VCC. When it comes to credit cards, an inevitable key word needs to be mentioned: credit limit. The application for virtual credit cards is very convenient. During the KYC stage, the card issuer generally does not review the credit status and thus does not approve the overdraft limit. Therefore, the credit limit of virtual credit cards mainly comes from two aspects. One is to share the limit of the existing physical card, and the other is the active recharge by the cardholder himself. Virtual credit cards do not provide credit functions. Users need to invoke the existing funds first before they can use these funds for consumption. Based on this form, it is more like a "prepaid card" rather than a "credit card". It is worth noting that the source of funds for users to invoke for recharge is actually diverse. They can make payments from their own e-wallets or credit cards, or they can recharge using the fund balance of the card-issuing platform.

In daily business practices, consumers often obtain VCC credit cards through payment institutions. Through commercial cooperation with banks and card organizations, payment institutions become card-issuing agents, that is, payment institutions need to play the role of a "bridge" between consumers and card organizations (such as VISA, Mastercard, etc.). On the one hand, card organizations or banks are responsible for handling card opening applications, generating information such as the card number, validity period, and CVV2 (Card Verification Value 2, credit card security code) of VCC, and are responsible for currency conversion, clearing and settlement of VCC consumption. On the other hand, payment institutions are responsible for collecting and transmitting VCC card opening information, and displaying and managing card information. Different division of labor roles determine different business models. For payment institutions, there are mainly two types of charges: one is the card opening fee, and the other is the transaction handling fee. "For recharges through the payment institution's account balance, additional recharge handling fees can also be charged for the balance."

It has to be said that the popularity of VCC virtual credit cards, to a certain extent, reflects the growing demand of consumers for convenient and secure payment methods, and also confirms the increasing scale and digital trend of the cross-border payment market. We believe that the payment needs of the majority of consumers in the process of cross-border transactions are diverse. It is believed that in cross-border e-commerce and other small-scale overseas transaction scenarios, the application scenarios of VCC will become increasingly diverse.