In recent years, businesses have faced an unsettling reality: fraud is on the rise. Nearly 70% of companies report an uptick in fraud losses, driven by increasingly sophisticated schemes like identity theft, invoice fraud, and phishing attacks. As these threats grow, the need for stronger financial safeguards has never been more urgent.
Enter virtual cards—a digital payment solution that's gaining traction as a key defense against fraud and a versatile working capital option. With the total volume of virtual card transactions expected to soar from 36 billion in 2023 to 175 billion by 2028, it’s clear that businesses are recognizing their potential.
But what makes virtual cards such a powerful tool in combating fraud?
What Are Virtual Cards?
Virtual cards are digital payment cards that function much like traditional credit cards but with a critical difference: they can be generated for temporary, specific use, often for a single transaction or supplier. Leveraging virtual cards allows businesses to enroll their suppliers via a secured B2B payable platform. All suppliers are required to go through an accounts payable approval process. Virtual cards are less prone to fraudulent attacks compared to other payment methods. Unlike ACH, which is an electronic form of a check, virtual card payments do not require buyers and suppliers to share full bank account information with each other.
There are two types of virtual cards: static and single-use. Each type serves a unique purpose, thus it’s essential to fully understand the needs of your business to determine which type would serve you best. A static card functions similarly to a traditional card but without a physical card and is typically provided to a single supplier/vendor. A single-use card is generated when one or more invoices has been approved by your accounts payable department and a payment instruction file is processed much like a check run. The supplier then receives an email as notification to charge a designated account which subsequently expires.
One of the standout features of single-use virtual cards is the ability to generate unique card numbers for each transaction. This means that even if a fraudster were to gain access to one virtual card number, they would be unable to use it for further transactions. This dynamic nature of virtual cards makes them secure and convenient for businesses.
In fact, a staggering 80% of organizations were victims of payment fraud attacks/attempts in 2023. While checks continue to be the payment method most vulnerable to fraud, payments made via ACH credits, wire transfers, and ACH debits were often targeted as well. These alarming figures highlight the vulnerabilities of traditional payment methods, further underscoring the effectiveness of virtual cards in mitigating fraud risk. By offering a more secure and controlled payment option, virtual cards can help businesses avoid becoming part of this concerning statistic.
How Can Virtual Cards Help Businesses Fight Fraud?
Virtual cards offer a range of features that make them a formidable tool in the fight against business-related fraud. Let's explore some of the key ways they protect your business.
Enhanced Security
One of the primary advantages of virtual cards is their enhanced security features. Unlike traditional cards, which remain active until their expiration date, virtual cards can be easily deactivated or set to expire after a single use or a specific transaction. This means that if a virtual card number is compromised, it can be immediately shut down without affecting other cards or accounts.
Moreover, virtual cards are protected by advanced encryption and security measures, making it extremely difficult for fraudsters to intercept or misuse them. Each transaction made with a virtual card is encrypted, adding an additional layer of protection against potential threats.
Spending Controls
Another powerful feature of virtual cards is the ability to set precise spending controls. Businesses can assign specific spending limits to each virtual card, ensuring that no more than the allocated amount can be spent.
In addition to spending limits, virtual cards can also be restricted to transactions with pre-approved vendors only. So even if a virtual card number is stolen, it cannot be used for unauthorized purchases. These spending controls provide businesses with a level of financial discipline and oversight that is difficult to achieve with traditional payment methods.
Businesses can also benefit from improved visibility into their financial activities. Virtual cards provide detailed transaction data, allowing companies to monitor spending and identify any irregularities quickly. This level of transparency not only helps prevent fraud but also supports better financial planning and budgeting.
Explore Virtual Cards Today
Protecting your business from fraud is more important than ever. Virtual cards offer a sophisticated, secure, and convenient solution that can help businesses mitigate the risks associated with traditional payment methods while also providing your business access to working capital. With their enhanced security features, spending controls, and streamlined expense management capabilities, virtual cards are quickly becoming an essential tool for businesses of all sizes.
As the volume of virtual card transactions continues to grow, it’s clear that more businesses are recognizing the value of this innovative payment solution. By incorporating virtual cards into your financial strategy, you can safeguard your business against fraud and ensure greater control over your financial transactions.
Discover the advantages of virtual cards and start protecting your business from fraud today. Learn more about our card payment solutions.