How virtual cards can protect against payment fraud

As check fraud schemes become increasingly sophisticated, the need for more secure payment alternatives has grown. Virtual card payments provide fraud protections that make them significantly safer than checks.

Think quick – where is your checkbook? Do you carry it with you, or is it at home collecting dust? If you’re like most people, you write significantly fewer checks than you used to. But that’s not the case in the business world. According to the 2022 Ardent Partners Accounts Payable Metrics That Matter survey, checks still make up 40% of all commercial payments.

Top performing AP departments use a strategic mix of payment methods to optimize working capital, and checks will always have a place in that mix. But as check fraud schemes become increasingly sophisticated, the need for more secure payment alternatives has grown.

Consider these indicators:

  • According to the 2022 Strategic Treasurer Fraud & Controls survey, 84% of organizations perceive an increased threat of fraud.
  • The 2022 AFP Payment Fraud Survey reports that 71% of surveyed organizations experienced payment fraud in 2021. 66% of that fraud involved checks.
  • The same AFP survey also noted that 68% of organizations have experienced business email compromise (BEC). 58% of organizations cite that fraudsters target their Accounts Payable department the most with BEC scams.

Virtual credit cards offer several fraud protections that make them significantly safer than checks. Virtual payments are cardless account numbers set to a specific supplier, payment amount and date range. Strong control features make them an ideal defense against payment fraud.

While no payment method is 100% immune to fraud, virtual cards are significantly more secure than checks. Five features help prevent theft and protect against loss.

Five-point virtual payment protection

Unique account number
Virtual card numbers are coded for a specific supplier and a set amount. They can’t be processed without the correct supplier credentials and they can’t be charged for an unauthorized amount.

Automatic deactivation
Once a payment is processed, a virtual account number automatically becomes inactive and can’t be used again. This reduces the risk of intentional fraud as well as accidental duplicate charges.

MCC controls
Organizations have the ability to designate allowable MCCs for their program. Fraud risk can be reduced by blocking MCCs that your organization wouldn’t likely be making payments to.

Account number expiration
Virtual credit cards can be coded with expiration dates to ensure that suppliers process payments in a timely manner. If a payment isn’t processed within the allowable timeframe, the account number expires and can’t be charged. Limiting the time that an account number is active reduces exposure to fraud.

Liability waiver
Virtual cards carry liability protection – a significant advantage that organizations often overlook or aren’t aware of. In the unlikely event that a virtual card number is fraudulently charged, the loss is covered by the paying organization’s commercial card association. Visa® and Mastercard® offer similar liability waiver protections. If a virtual account number is processed for an unauthorized charge, organizations have the same chargeback rights as “card not present” commercial card transactions. That means that if the fraud is reported according to contract terms, the paying organization won’t be liable for the loss.

Mount a strong defense

The best defense against fraud is to prevent it from happening in the first place. If your organization doesn’t conduct regular reviews of its payment security policies and practices, make that the first priority. Plans should address scams initiated by individuals – such as phone calls and letters – as well as automated, electronic cybercrimes like business email compromise, phishing and hacking. Are procedures in place? Do employees have the tools and training they need to put them into practice?

Review current payment methods  

Consider the security features of your organization’s payment methods. If your AP department relies heavily on check payments, the addition of virtual cards could reduce your exposure to fraud. And your card association’s liability waiver can provide an additional layer of protection against loss.


Start of disclosure content

The creditor and issuer of U.S. Bank charge cards is U.S. Bank National Association, pursuant to separate licenses from Visa U.S.A., Inc., and Mastercard® International Inc.

Notice: Foreign-denominated transactions are subject to foreign currency exchange risk. Customers are not protected against foreign currency exchange rate fluctuations by FDIC insurance, or any other insurance or guaranty program.

The foregoing products are available solely for business transactions and not for personal, family or household transactions.