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May 03, 2021
3 minute read

How virtual cards reduce the hidden costs of compromised credit cards.

Written by Laura Slauson
virtual cards reduce the hidden costs of compromised credit cards

Anyone who’s experienced a compromised credit card knows the initial feeling of dread. You’re pretty sure you won’t have to pay for unauthorized charges, since the Fair Credit Billing Act protects card holders’ liability for fraudulent charges. But that protection only applies to the amount charged. There will be a cost, and it will come in the form of the hours it takes to clean up credit-card fraud’s aftereffects. That’s real company time, and it can add up.

It can also lead to frustration and damaged morale — cleaning up credit fraud is a time-consuming process, and often disrupts more important work. 

If you’ve ever dealt with a compromised card, you likely went through each of these tedious steps:

  • Confirm that the card was compromised.
  • Close down the card’s account.
  • Painstakingly identify charges that seem fraudulent and verify with those who have access to the card.
  • Dispute those charges with the vendor and/or with the bank.
  • Request a new card.
  • Update any subscriptions or recurring charges with the new credit card information.

In today’s credit card economy, that final step can be a big one. According to Blissfully’s 2020 SaaS Trends Report, midsize companies maintain an average of 137 SaaS subscriptions — and often companies use just one or two corporate cards for all the subscriptions. Updating that many subscriptions is a lot of repetitive work. Plus, an oversight or lapse in payment on an important software program can lead to disruptions in service that ultimately hurt business operations.

Credit card fraud rose with the onset of the COVID-19 pandemic, partly due to our increased reliance on online transactions. What is even more concerning is that fraudsters don’t need to have the card in their possession. “Card not present” theft is also on the rise, and a growing number of sites on the dark web sell card numbers and other personal information. That kind of fraud can be difficult to track until spotted on a credit card statement and, even then, it can slip through the cracks unnoticed. We’ve talked to companies who, prior to adopting virtual cards, paid for unwanted services for months before realizing it.

This type of fraud, and the money and time that it costs businesses each year, is not sustainable. Luckily, modern software-enhanced cards can alleviate much of the problem.

Virtual cards — an idea whose time has come.

Virtual cards can be vendor specific, so if one is somehow compromised, only the card information for that vendor is affected, and it’s not necessary to update payment information anywhere else, saving time on tedious communication.

Also, by their very nature, virtual cards are less vulnerable to fraud attempts. According to the Association for Finance Professionals, 34% of businesses experienced successful or attempted fraud related to corporate credit cards in 2019, but just 3% had similar attempts on virtual cards.

Even more safeguards are built into the best virtual card programs:

  • The ability to apply parameters for spend amounts reduces the possible impact of fraud. Plus, with the ability to change limits when necessary, budget owners can also adjust the levers of control in order to reflect changes to the budget.
  • Virtual cards create an audit trail as transactions take place, so that the relevant approval chain, spend amounts, and other documentation are easily accessible from one place.
  • A secure “Share” feature avoids the potential risks of sharing a credit card number through email or Slack.

Physical card security.

Sometimes a physical corporate credit card is necessary, especially when traveling. Physical card programs also require safeguards against fraud, such as sending out an alert when suspected fraudulent activity takes place.

For added protection, add physical cards to digital wallets like Google Pay or Apple Pay. These apps have an additional layer of security, since card information isn’t exchanged with the vendor. Instead, the app sends “tokens” which are randomly generated numbers used as payment credentials.

Stay secure.

Yatin Mody, Head of Finance at Postman, recognized the security of virtual cards right away when he was looking for a solution to his company’s ongoing problem with fraudulent transactions.

“Virtual cards were the selling proposition that made us jump into Airbase. We have never had any Airbase card get compromised. In the event that one does become compromised, only the single virtual card would be affected, unlike before.”

Solve the problem of card fraud before it even takes place. Switch to modern payment tools like virtual cards or by uploading physical cards to virtual wallets. After all, you have way more important things to do with your time than swap out card details with vendors.

Let Airbase show you how we can help with credit card security — schedule a demo today!

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