Fintech Samples

PRODUCT EXPLAINERS 

Title: How Virtual Cards Protect Your Business Against Payment Fraud 

The Problem with Traditional Payment Methods 

Every time a company hands over a physical card to their customers in order to help them carry out financial transactions, the company might be taking a serious risk. That card or number itself might be stolen, misused or shared inappropriately. Now, the customer comes back ordering the bank to block his/her account. Finance teams now have to go through hours of reviewing statements, flagging suspicious activity and dealing with fraud claims.

An average company loses 5% of it's expected annual revenue to either fraud or financial mismanagement. E.g, a business with an annual revenue of about $10 million annually, loses about $500,000 to issues that could been prevented from the start.

Due to the recent technological advancements, virtual cards has now emerged as the leading payment method. Instead of the normal physical card, virtual cards are digital payment credentials with built-in controls. 

What Are Virtual Cards?

Virtual cards are randomly generated card numbers that are being linked to your company's payment account. Each virtual card functions like a normal credit card for carrying out transactions but with one crucial difference, you control every parameter.

Think of virtual cards as programmable money. You create a card number for either a specific vendor, a fellow employee or a particular transaction. With set spending limits, expiration dates and merchant restrictions, the card once created works beyond boundaries you'd ever dreaded.

Example: Your marketing team needs to pay for Facebook ads. You create a virtual card with;

•$5,000

•Only works for Facebook 

•Expires after 30 days

•Assigned to Marketing Manager Sarah

Sarah enters the virtual card number into Facebook's payment system. The ads run, Facebook charges the card and your finance team sees what was actually spent. If Sarah attempts to use at any other online platform, the transaction declines automatically. If someone steals the card number, they can't use it anywhere except Facebook and has a limit of $5,000.

How Virtual Cards Work 

Step 1: Creation of the card

Log into your payment platform and click “Create Virtual Card.” You'll start with your configuration.

•Card holder name: Assigned to specific employees or department.

•Spending limits: Set maximum amount whether daily,weekly,monthly or yearly.

•Merchant restrictions: Lock card away from specific vendors or categories.

•Expiration date: Auto-expires after one transaction or set timeframe.

•Usage rules: Online only,recurrent billing etc.

The system immediately generates a 16-digit card number,expiration dates and CVV codes. Share these details with whoever needs to make the payment.

Step 2: Transaction processing 

When the cardholder attempts a purchase, your payment platform checks the transaction against the rules you set. If the right merchant, specified spending limit, expiration dates are accurate, the transaction is then approved. If any rule is violated, the transaction is declined instantly.

Step 3: Real-Time Tracking 

Every single transaction appears on your dashboard within seconds. You'll see;

•Exact merchant name and location 

•Transaction amount 

•Card holder who made the purchase 

•Classification of categories 

•Images of the receipt (if vendor provides them digitally)

No more waiting for monthly statement of account. Your finance team has complete visibility the moment any amount is moved out of your account.

Key Benefits for Your Business 

Detection of Fraud 

Traditional corporate cards get compromised regularly. They can't be banned because a card that pays for office supplies can also be used to buy personal items or get used by criminal elements.

But virtual cards make fraud nearly impossible. Even if a card number is stolen, the thief can't use it. The merchant restrictions means that it only works at the specific vendor being approved by you. The spending limit further caps potential damage and can be cancelled directly from your phone without affecting the other payments.

Simplifies Management of Expenses 

Finance teams spend countless hours reviewing credit card statements and asking questions like; “Which charge was that? Who approved the purchase Where's the receipt?

Virtual cards solves this automatically because each card is created for a specific purpose and attached with documentations from the very start. Your dashboard displays exactly what each card was used for, who authorised it and where the money went. During tax or audit season, you have your complete transactions records ready at your disposal without going through the hassle of email hunting or filing cabinets.

Full Control of Vendor Subscriptions 

Subscription for software services drains budget annually because when someone signs up for a tool and forgets about it, your company is then forced to pay monthly fees. Either free trials are paid plans automatically or services being renewed at higher prices without approval.

Create virtual cards specifically for subscription services with monthly spending limits. If the vendor tries to charge more than expected, the card declines and you're alerted immediately. Instead of calling the vendors or trying to create a scene, cancel the subscription by simply deleting the virtual card.

Empowers Employees Safely 

“What if they overspend?.What if they card gets stolen,” these are questions that causes anxiety within the finance department.

Virtual cards let you empower employees without losing control. Travelling sales rep needs a hotel? Create a virtual card with a limit of $2,000 that only works at hotels and expires once the trip is over. Marketing intern needs to pay for stock photos? Create a card with a limit of $200 that can be used at photography sites only. The employee get autonomy, you keep guardrails.

Improved Cash Flow & Visibility 

You don't know what's about to hit your account until it does due to how physical cards hide upcoming expenses.

Your dashboard along with all the active cards displays all the remaining balances and incoming expenses due to the set limits placed on the virtual card.

This helps the finance department to forecast cash needs accurately instead of being hit by unexpected charges.

Common Use Cases 

Vendor Payments: Create unique cards for each vendor and you'll immediately see if a vendor overcharges you. Instead of updating information for payments, simply delete the card especially if you've dismissed any vendor.

Employees Expenses: Issue out cards to employees with specific needs. Traveling employees get cards that works only during the timeline of the trip.Remote workers get cards for home equipment with appropriate spending caps. 

Management of Subscriptions: Each software subscription gets it's own card. You'll know exactly what you're paying per tool, discover unexpected price increases and eliminate forgotten subscriptions eating through your budget.

One-Time Purchase:  Creating a virtual card for a single large purchase (like equipments or flight tickets) protects you against future unauthorised charges. Disable the card immediately after the transaction has been successful.

Payment for Freelancers: Pay contractors through virtual cards instead of wire transfers or checks. You get full control over what they charge and how much. If a project goes over budget, the card simply declines any extra charges.

Security Features 

Merchant Locking: Cards only work at approved merchants. Even if someone gets hold of the card number, they can't use it anywhere.

Amount Limits: Set maximum amount being spent per transaction whether daily,weekly or a lifetime card. This protects you against large unauthorised purchases.

Full Control of Expiration: Cards can either expire after one-time usage,specific expiry dates or never. Single-use cards are used by individuals who prefer concealed identities to avoid risks of exposure.

Instant Cancellation: Cancel a virtual card instantly from your phone if you notice any signs of fraud. All other company cards keep working because you only disabled the compromised card.

Real-Time Alerts: Get notified instantly whenever cards are being used, declined or reached it's limit. Suspicious activity get noticed immediately instead of weeks later on a bank statement.

Getting Started:

Most virtual card platforms offer free trials. You can typically;

•Create your first virtual card for free.

•Test spending controls and merchant restrictions.

•See real-time tracking of transactions.

•Evaluate on whether virtual cards are a perfect fit for your business.

Setup takes about 15 minutes. Connect your business bank account, verify your identity and start creating cards. Many companies begin by converting their high-risk payments options ranging from subscriptions,vendor payments,employee expenses to virtual cards firstly, then expand from there.

Is This Right For Your Business?

Virtual cards work best for companies that:

•Make frequent payments online.

•Have employee who make alot of payments.

•Struggle with reconciliation of expenses.

•Need better protection against fraud.

•Need detailed account of their spending.

If your business still relies primarily on checks or cash, virtual card might not provide immediate relief. But if you're paying vendors online, managing subscriptions or empowering employees to make purchases, virtual cards is the perfect choice due to it's nature of transforming payment management from a bottleneck to a competitive advantage.