How to Prevent B2B Payment Fraud with Virtual Cards

Most businesses have taken steps to mitigate the risk of B2B payment fraud in their organization. However, some instances of fraud are incredibly difficult to avoid. In 2019, 81% of organizations were victims of attempted or actual fraud.

Many believe keeping credit cards, checks, and ACH payments outside of their vendor payment strategy will reduce their risk of fraud. While this made sense at one point in time, new virtual card technology is changing the way businesses think about credit card payments. Here are four ways virtual cards make it safer for your business to make online payments with credit cards:


1. Tokenization Protects Credit Card Information From Getting Exposed

Virtual credit cards use a method called payment tokenization to protect your account information when making B2B payments. Tokenization creates tokens: randomly generated payment credentials that replace your static card number. The tokens can only be charged one time for a specific amount. Tokens are used in the payment process and do not expose your primary account number (PAN) or other details. Since your token is not your PAN (and there is no PAN with SilverPay), it cannot be used outside the context of a specific transaction.

Additionally, like encryption, tokenized data is not mathematically reversible unless you have the original key used to create the token. If a hacker breaches into a system, the number stored can’t be extracted into any value. This makes virtual cards a much more secure method for preventing B2B payment fraud than traditional paper checks. Whereas paper checks are incredibly easy to forge, virtual cards conceal all private information during the payment process from beginning to end.


2. Charges Can Appear as Debits on Your Bank Account

Paying suppliers by check can take a minimum of one week to be received and processed. Therefore it is extremely time-consuming and leaves room for ambiguity in your books. AP automation solutions make it easy for your business to pay individual invoices with virtual card technology, and to continue utilizing invoices as a payment control for credit card payments. 

Rather than all charges appearing in a monthly statement and covering them all with one payment, individual virtual card transactions can appear as debits in your bank account. This increases your visibility into every credit card transaction and eliminates the risk of missing fraudulent charges until they show up at the end of the month on the monthly statement. This also enables you to dispute inaccurate charges more promptly and also saves your employees time to continue focusing on forward-thinking work rather than making reconciliations in bulk at the end of the month.


3. Virtual Cards Reduce Human Error

Typically, B2B payments require a manual process to facilitate transactions. With manual processes comes the possibility of human error. Even credit cards are susceptible to error and fraud. When different employees are using different corporate and personal cards for payment, it becomes difficult for a business to control every employee who collects a credit card number and the process that they follow in order to ensure the payment is completed. Virtual cards eliminate this problem.

Since virtual cards are only used once before disappearing forever, their one-time use function is a huge advantage when making B2B payments. With virtual cards, business owners don’t have to worry about the transferring of corporate credit card numbers or how many “hands” that number must pass through before payment is complete. With the virtual card’s one-time use feature, it can only be used for its intended purpose.

4. Virtual Cards Minimize Risk with Enhanced Visibility and Controls

Virtual cards enable your accounts payable team to achieve greater spending control with the ability to set unique parameters for each purchase, including limits for the payment amount, date range, and supplier type. Without an integrated form of payment like virtual cards for credit card-based transactions, a business’s visibility and control of spend is hampered. When visibility is limited, managing B2B payment fraud becomes much more complicated given the large number of payments that AP departments make every day.

Virtual cards offer a simple and effective tool to manage B2B payment fraud with special security, anti-fraud, and reconciliation features. For example, virtual cards are transaction-specific and can deliver strict controls at the point of purchase as well as automatic reconciliation on the back end. Controls can be set per transaction by account limits and supplier type.


Virtual Cards and AP Automation – A Winning Combination

Your business’s transition to virtual cards for B2B payments is simplified with AP automation technology. MineralTree streamlines the process of paying with virtual cards by centralizing the AP process into one cohesive workflow and offers the SilverPay virtual card as one of many available payment options at no additional cost. SilverPay utilizes the Visa Network and provides rewards in the form of cash-back rebates for purchases.

According to most middle-market businesses, one of the greatest barriers to adding virtual cards to their B2B payment repertoire is a lack of visibility into which vendors can accept card payments. With MineralTree, this is a non-issue. MineralTree reaches out on your behalf and will automatically enroll suppliers that agree to accept virtual card payments. This provides the flexibility to continue paying other vendors with ACH or checks. Pairing accounts payable automation with virtual card payments is a simple way to streamline your existing accounts payable process, and create the benefits of increased efficiency,  optimize your cash flow, and mitigated the risk of B2B payment fraud.

Curious to learn more about how accounts payable automation can help your team leverage electronic payments? Contact MineralTree for a personalized demo.

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We're transforming accounting by automating Accounts Payable and B2B Payments for mid-sized companies. Our award-winning solution has helped over one thousand businesses transform accounts payable from a source of inefficiency and fraud risk to a secure and strategic profit center that provides visibility into key cost drivers.