Definition. Virtual PIN, started in 1994 by a company called First Virtual Holding, was a system for making credit card payments over the Internet without exposing the credit card number to the merchant. It required no special software for a customer to make a purchase. Virtual PIN relied on difficulty of intercepting and forging e-mail.

To enroll, a customer gives their credit card information and their e-mail address to the First Virtual (this was done by phone). After the credit card information has been verified, the customer receives their PIN by e-mail.

The procedure for purchasing an item using Virtual PIN is as follows:

Step 1: The customer gives the merchant their Virtual PIN.

Step 2: The merchant sends the Virtual PIN and the amount of transaction to First Virtual.

Step 3: First Virtual sends and e-mail to the customer asking to confirm the purchase.

Step 4: The customer answered “Yes”, “No”, or “Fraud”.

Step 5: If the answer is “Yes”, the merchant is informed that the charge has been accepted. It “No”, the charge is declined. If the answer is “Fraud”, the charge is investigated.

Even though no encryption was involved, an intruder could not use a virtual PIN without being able to intercept and answer the e-mail message to confirm the purchase.

Unlike credit cards which carry the customer’s name, Virtual Pin provided a customer’s anonymity from the merchant. The e-mail confirmation of the transaction served a protection against merchant’s fraud.


Unfortunately, while the system has been created for all kinds of online business, the main use of Virtual PIN at the time was for buying and selling pornography. Virtual PIN tried to disassociate itself from the market. Eventually the company abandoned the Virtual PIN and become specialized in sending promotional e-mail.

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