Virtual Payment Yields Tangible Benefits
Fraud can strike anywhere, but the travel industry is particularly vulnerable and under increasing attack. According to Forbes, land travel saw a 38% fraud increase from 2018 to 2019. Air travel fraud leapt by 61 percent. And the loyalty programs used by frequent travelers got hit most of all, with an 89% surge year over year.
A decent amount of this fraud stems from expense reports. A little typo here, a wrong number there, and it starts to add up. So, how do we prevent this fraud from taking place? How do we remove the room for error when moving travel costs into an expense system? With virtual payments, of course.
Virtual payments for travel and expense management
A physical credit or debit card typically works like this: A bank or issuer fronts the money for a transaction, which the buyer must then repay. Transactions are conducted by using a physical card with a string of digits tied to a single user account, confirmed with a three- or four-digit security code.
Many users can have physical cards linked to a single account, and therein lies the vulnerability. A prominent danger with physical cards is that an unauthorized person could gain access to one of these cards, account numbers or security information. There are several entry points for fraud with physical cards, but with a virtual card, it’s like a business traveler gets a unique credit account for every purchase.
Like physical cards, a virtual payment card uses a string of numbers tied to an issuing partner, an expiration date, and a security code. However, virtual cards aren’t stamped with account numbers. Instead, a new card number is generated at the point of sale, tied specifically to that transaction.
Unlike credit cards, companies using virtual cards can define limits on account use according to criteria like purchase amount, date range, and merchant category. This can help companies dramatically lower the odds of fraudulent transactions ever occurring. No wonder Yahoo Finance reports that virtual payments are expected to explode from $160 billion in 2018 to $500 billion in 2024.
If you get nothing else from this article, here’s the bottom line: Virtual payments can reduce fraud risk while improving accounting accuracy, accountability, and auditability. Let’s take a closer look at this technology’s high-level benefits.
Virtual payment advantages for corporate travel
Virtual payment processing is also now widely accepted, and easy to adopt on top of conventional credit and debit handling. For travel managers, the control they can get with virtual payment accounts leads directly to better compliance with travel policies.
The speed and accuracy of virtual payment offerings makes them ideal for gathering more granular detail on travel spending as well as enabling open book accounting practices among partners. Virtual payment systems usually include basic tracking and analysis tools that can quickly reveal unusual spending patterns.
Beyond the safeguards against fraud and overspending, finance departments can appreciate how virtual payment platforms can easily link into expense management, ERP, or general ledger systems. I mean, who doesn’t appreciate the majesty of streamlined payment reconciliation?
Most banks now use virtual payment, so there’s little chance of accounting process changes or complications. Not least of all, virtual payment can help enable lower processing costs for all parties involved due to lower fraud risk.
Virtual pay is a reality with Deem
As consumers grow accustomed to platforms such as Apple Pay and Google Pay, they expect to have similar benefits from their corporate payment platforms. That’s why Deem built Etta and Etta Mobile to support Virtual Pay on desktop, iOS and Android devices.
Virtual Pay can become the default payment method for all bookings to help keep things simple for corporate travelers. It provides travel managers with more expense tracking detail and control than ever before, including the ability to make spending codes expire once their limits have been met.
With centralized and next-day reporting, travel managers and the employees they serve can also stay aware of spending conditions rather than face the surprise of month-end statements.
Virtual Pay gives companies a route to replace manual reconciliation and post-trip expense reporting with one quick, automated step. Better yet, adopting Virtual Pay couldn’t be easier, and there are no downsides.
Learn more ways you can control costs in your business travel program with Deem.
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