To combat payment fraud, virtual card payments are on pace to overtake purchase cards in 2024 as the primary way business expenditures are made for billion-dollar-plus organizations, according to a presentation at NEAFP by MasterCard’s Cindy Finley.
Driving this trend is the fact that virtual cards are the “most secure” form of payment, accounting for just 9% of fraudulent transactions, according to Finley, MasterCard’s senior B2B Payments Consultant.
In comparison, checks account for more than 60% of all fraud payments – despite accounting for a small share of payments, she says. This point was echoed by NEACH’s CEO Sean Carter who shared that despite the number of checks being used is declining, the number of check frauds is “skyrocketing”.
Companies are especially sensitive to fraud after 65% report being exposed to payment frauds in the most recent year data is available, shared PNC’s Senior Digital Product Manager Christopher Byers. A whopping 71% of organizations reported they were targeted – and 40% experienced a financial loss — specifically as a result of business email compromise (BEC) fraud attempts in 2022, according to PNC’s data.
In 2023, Byers says $2.9 billion was lost due to BEC fraud. That was not an isolated year: $14 billion has been lost due to BEC since 2015. And the size of the frauds have climbed each year.
Account takeover fraud is also on the rise. In 2023 there were more than 300,000 reported cases of malware, phishing, and ransomware attacks.
“Fraud isn’t a matter of if, but when” you’ll be targeted. Carter adds.
One concern he shared is that organizations are more concerned about getting their money back from banks then they are at doing root cause analysis to avoid the next attack. “They don’t ask: ‘how did this happen?’”, he says. “They aren’t solving the problem.”
Positive Pay was also suggested to combat fraudulent payments, but deadlines are costs were sited as the most common objections.
More insights and data on fraud can be found in AFP’s 2024 Payments Fraud and Control Survey Report.
