How to prevent fraud and increase cash flow with Virtual Payments
How to prevent fraud and increase cash flow with Virtual Payments
August 31, 2020
Due to COVID-19, the move to electronic payments has grown exponentially. When the pandemic is over, the change will have been made however, and banks are not forecasting a return to traditional money exchanges in the future. As we focus on compliance, cost and expenses efficient expense management practices are more important than ever.
Virtual payments have emerged as a viable and secure alternative to traditional payment methods such as credit cards. This payments technology has now even been consumerised outside of the enterprise arena, with consumer apps offering single-use numbers for security. But what exactly are virtual payments? What problem do they solve and why should businesses incorporate them into their payment solutions and contract options?
Virtual payments solve the security issue of having one card number to use for multiple transactions. This means that anyone with the number – including a criminal – can use the card to buy things. So rather than a fixed number that can be re-used, a virtual card payment is a onetime number for a specific travel event. This is ideal for travel agents and corporate travel managers who want to protect from themselves fraud and be sure a particular transaction is for approved travel. This also means that transactions do not need to be manually reconciled post-trip. This saves time and reduces the potential for human error.
When we look specifically at compliance and fraud, there are three key problems when it comes to payments: fraudulent transactions, policy compliance, and expense reporting. Since a virtual card payment is a unique card number for each purchase, it addresses each of these problems.
Fraud has become an enormous issue throughout the world, especially when it comes to “card not present” transactions generally associated with online commerce.
By delivering a single-use, PCI-compliant number assigned to a single designated transaction with one vendor, virtual card payments prevent “card not present” fraud.
Contrary to popular belief, corporate credit cards are not the most compliant payment tools. For example, with cards in their possession, employees can use them at will. This introduces the need for audits to ensure that transactions match policy, while bookings must be matched to payments manually. Market research found that buyers spend an average of 40 hours reconciling expense and other payment data each month. However, with virtual card payments, bookings are automatically matched to payment.
Whilst there are many products in the market—working directly with the majors such as Mastercard and Visa for example, there are also companies who have developed solutions that have allowed them to deliver solutions beyond their original product. While AirPlus has always been the ‘go to’ provider for Travel and Event Payment they have now launched AirPlus Virtual Cards for Procurement to optimise payments and cash flow outside of travel.
Wherever MasterCard is accepted you can pay for goods and services such as, Online advertising, Software licenses, Couriers, Telecommunications, office supplies and other goods and services.
This method of payment will also be included with contracts. The increased cash flow comes with longer payment terms on the card than there are direct with the vendor for traditional payments that can save thousands and simplify your buying processes. For more information or support with managing and analysing spend please email procurement@narta.com.au.