How technology has made corporate cards more secure.
The corporate card has come a long way since its inception in the late 1800s. Originally used as a physical representation of credit, corporate cards have evolved into a digital payment method that is more secure and efficient than ever before. In this article, we take a look at how technology has expanded the function of corporate cards, and vastly improved their efficiency. We also explore how they are changing the way businesses operate.
In the 1950s, when they first appeared as a device to facilitate payment for travel and entertainment, corporate credit cards were paper-based and had no security features. Since then, corporate cards have become a mainstay of company spending, but their ubiquitous use was accompanied by increasing levels of fraud. According to a Association for Finance Professionals survey from 2019, 34% of businesses experienced successful or attempted fraud related to corporate credit cards.
Although they have obvious advantages for employees spending money, corporate cards create a lot of work for finance teams. A compromised card can lead to hours on the phone trying to cancel the card and update any recurring payments. Unexpected spending disrupts budgeting. It is often hard to track down who made an expense and why, since cards are typically passed around among multiple employees.
Some of the security features that have been added to corporate cards over the years in order to improve security and visibility include:
The EMV chip.
The EMV (Europay, Mastercard, and Visa) microchip was created to prevent credit card fraud. Prior to EMV, every card issuer followed its own security protocol. Now, EMV protocols are overseen by EMVCo, a group that includes American Express, Discover, JCB, Mastercard, UnionPay, and Visa.
An EMV chip is a microprocessor that encrypts payment information when a customer makes a purchase. This encryption helps to protect against fraud, as it’s much more difficult for thieves to steal encrypted data than unencrypted data.
Another advance in corporate card technology is the payment gateway. A payment gateway is a secure, online system that processes payments for ecommerce transactions. It connects to merchant accounts and provides real-time authorization of credit cards.
Another development in corporate card technology is near-field communication (NFC). With NFC, a payment can be made by holding the card close to a reader.
NFC adds an additional layer of security for payments made with digital wallets like Apple Pay and Google Pay because the card information is not exchanged. Instead, a unique token is created for each transaction.
Application program interfaces (APIs).
An API is a software intermediary that allows two unrelated applications to talk to each other. These gateways mean that software companies can create software for approvals, categorizations, and documentation capture that integrates with corporate card providers.
Virtual corporate cards.
Another recent development in corporate card technology is the use of virtual corporate cards. A virtual corporate card is a digital card that is stored in the cloud. The card can be used to make online payments or in-store purchases.
One advantage of using a virtual corporate card is that the card number is not stored on the device. This makes it more difficult for someone to steal your information if they gain access to your device. The Association for Finance Professionals found that only 3% of surveyed companies experienced fraud attempts on virtual cards.
Another advantage of virtual corporate cards is that they make it much easier for finance teams to track spending. The virtual corporate card can be linked to an account on the corporate accounting system. This allows finance teams to see all of the transactions that have been made with the card. It’s also much easier to spot duplicate spend and avoid zombie spend.
Virtual cards can be specific to one merchant, or even one transaction. If the card is compromised, it can be canceled immediately and a new one issued.
Virtual cards with automated approval workflows have the added advantage of providing visibility into and control over employee spending. By setting merchant and spending limits, employers can be sure that their employees are not going overboard with corporate card expenses.
Are you taking full advantage of the security features in today’s corporate cards? Find out how Airbase can help — book a demo today.
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.
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