How Using a Virtual Credit Card Protects Payments from Fraud

There are many ways for modern businesses to safeguard their important data against fraud. Regular audits, enhancing internal controls, and more robust employee training are often where organizations focus when it comes to improving their fraud prevention tactics.  

For payments, however, there is one specific payment method that can help businesses keep their important transactions secure: a virtual credit card. By using this payment method, AP teams can guarantee safe, timely, and one-time payments to their important suppliers, among other benefits. 

In this blog, we’ll dive into what a virtual credit card is, which businesses can benefit the most from adding this payment method to their operations, and how this tool ties into overall financial performance and fraud prevention. 

The Function of a Virtual Credit Card 

To understand why a virtual credit card may be beneficial for businesses looking to prevent fraudulent events, we should take a deeper look at its function.  

A virtual credit card is a digital version of your company credit card that uses a disposable number that’s different from the one on the physical card itself. 

The disposable number protects the card itself from being exposed to fraud, while still enabling on-time payments that keep your suppliers happy. Once the payment is received and accepted, the disposable number becomes invalid and can’t be used again. This makes making payments significantly easier and enables your business to enjoy a more visible payment process. 

However, it is important to note that a virtual credit card’s functionality may vary from one company to the next. For example: 

• Some virtual credit cards can only be used at specific retailers. 

• Others can be used indiscriminately for any kind of payment.  

Once your company has identified the right credit card company and virtual card, you can implement this technology into your existing payment processes.  

Which leads us to our next question: which kinds of businesses can benefit the most from this secure payment method? 

Which Businesses Can Benefit the Most from This Payment Method 

While every business regardless of industry or organizational size wants to avoid payment fraud, there are a few kinds of companies that can particularly benefit from this additional layer of protection.  

Healthcare Organizations 

Healthcare organizations, with all of their sensitive patient data and the large numbers of suppliers they interact with daily, are exceptionally vulnerable to payment fraud. Even though the industry is well-aware of the risks they face, only a small percentage of businesses currently use payment automation—roughly 16%. This leads to high costs of processing traditional paper checks, as well as long wait times for important suppliers that can put patient and employee safety at risk.  

This is where a virtual credit card comes in to stop payment fraud and other process headaches in their tracks. A virtual card solution can be leveraged not only for increased payment efficiency, but also enhances security for these important transactions with less required employee interaction. Instead of having to send a request for a paper check, an automated system submits a payment instruction file to the organization’s bank for a virtual card. This number is then sent to a supplier where their AR team can process it as they would any other card payment. 

By adding a virtual credit card and payment automation, healthcare organizations can improve their cash flow and payment security for the betterment of their teams and the patients they care for.   

Businesses With High Invoice Volumes 

Businesses with high invoice volumes exist across numerous industries. From airlines to retail to banks, organizations that juggle hundreds of thousands of transactions daily need to apply careful consideration to their payment processes.  

With a virtual card, businesses like these can ensure secure invoice fulfillment. With no physical item to misplace and no credit card number to clone, important payments can be scheduled with no risk of being intercepted. Additionally, automated payments via virtual credit card eliminate the potential of suppliers re-using a business’s credit card information accidentally. This transparency between high volume organizations and the suppliers they rely on results in faster payments, an improved client-supplier relationship, and overall better business health.  

While the previously mentioned kinds of businesses stand out as ideal candidates for virtual credit card optimization, it is important to note that organizations of all kinds and sizes can capitalize on the benefits of this technology. 

How Virtual Credit Cards Tie into Financial Performance and Fraud Prevention 

Great news: your business has decided to leverage a virtual credit card as a part of its payment automation processes. Its convenience, security, and flexible functionality have appealed to your AP team and IT department alike.  

But what does that mean for your organization’s overall financial performance and fraud prevention tactics?  

A few ways a virtual credit card can make an impact on your business’s back-office operations include: 

• Advanced card controls, enabling your business to instantly freeze or cancel cards with suspicious activity. 

• The ability to issue multiple cards that can be individually assigned to your various suppliers, which can be easily tracked or canceled if your time with that partner has ended.  

• Better visibility into spending and cash flow.  

• 24/7 bill payment options that can be scheduled anytime, anywhere, and automated with ease.  

• Reduced reliance on paper checks, which cost more, are more vulnerable to fraud, and are more time-consuming for your AP team.  

• Quicker payments to your suppliers, which in turn can result in significant supplier discounts on your most common, important payments. 

Virtual Credit Cards: A Modern, Automated Payment Solution 

Virtual credit cards, especially when paired with a payment automation solution, can transform how your business handles fraud prevention. There is no denying that the technology is more secure, efficient, and modern than its ACH and paper check counterparts.  

At DocuPhase, we understand the importance of protecting your payment processes from start to finish. That’s why our AP automation solution has been designed to work with your business to prevent fraud and keep your payments timely, organized, and secure. 

Schedule a demo with us today to learn more about how our v-card options and payment management solutions can benefit your business!