When seeking to streamline operations and safeguard against fraud, choosing credit cards over other payment methods for the majority of business expenses can have clear but sometimes overlooked benefits. This includes greater fraud protection, extension of working capital and even rewards that can be invested back into the business.
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Choose payment methods that fit your business
Business credit cards can be integrated into your existing expense management practices, with many issuing banks offering card features that complement other banking products or integrate with reporting software. Working with a committed, collaborative and responsive banking partner can form a beneficial relationship to avoid fraud and better track transactions.
A strong relationship manager that understands your spending dynamics can assist with optimizing your payments strategy by balancing payment risk, cost, control and integration. As EFTs all but eliminate the need for traditional paper checks, understanding the full range of digital transactions becomes imperative for business owners and leaders.
Features that add protection and efficiency
Many businesses have a continued reliance on debit cards or checks that can have unnecessary risks compared to credit cards.
According to the 2024 Association for Financial Professionals (AFP) “Payments Fraud and Control Survey Report,” check fraud has consistently been the payment method most vulnerable to fraud since first surveyed 19 years ago. Meanwhile, the percentage of organizations that experienced payments fraud through corporate and commercial credit cards has fallen in the past year. In 2023, 20% of organizations were hit by card fraud, which is a significant decrease from the high 36% in 2022.
Business credit cards linked to your other business bank accounts can offer many conveniences that can simplify daily operations. From flexible credit line options to travel benefits, low introductory APR, cash-back programs and more, there are a variety of offerings to choose from based on specific financial needs and spending habits.
However, maximizing the benefits of credit cards also requires educating the workforce on proper usage and understanding the ongoing trends related to fraud schemes.
Like some debit cards, many major credit cards offer $0 fraud liability to credit card holders, meaning if you fall victim to a scam, the card company will cover your loss. Still, it’s important to stay vigilant to maintain the security of your business accounts. Because there is often a 60-day window to report fraudulent transactions, be sure to review your statement on a regular basis.
To avoid falling victim to business credit card fraud, update your company’s passwords regularly and try to avoid making purchases or logging in to your credit card account while using public Wi-Fi. As a general rule, only give out your corporate card number over the phone when you initiate the call.
However, there are many other ways that credit cards can be targeted or protected to be aware of.
Common Types of Credit Card Fraud
From sophisticated online scams to physical card skimming devices, fraudsters are constantly devising new methods to exploit business owners. Here are three of the most common credit card scams:
- Online Shopping Scams: Fraudsters may send links to fake websites that look legitimate but are crafted to fool individuals into providing their credit card or other personal information. Scammers may advertise low-cost business travel fares or limited-time deals on fraudulent vendor websites to create a sense of urgency.
- Phishing Scams: Phishing scams can appear in the form of emails, texts or social media messages that seem to be from a legitimate source, such as a bank or government organization. The messages typically ask the recipient to click on a link or provide personal information, such as their credit card number or login credentials.
- Card Skimmers: Skimmers steal credit card information by placing a device on or near a legitimate card reader, such as an ATM or gas pump. The device reads the credit card information and stores it, allowing the fraudster to retrieve the data later and make fraudulent purchases.
Take Advantage of Fraud Prevention Tools
A reliable banking partner should offer a variety of fraud prevention tools and technologies to help protect a business from credit card fraud:
- Fraud Monitoring Software: Banks can work with card processors and credit card companies to mitigate and stop fraud. This includes identifying scammers by utilizing cloud-based predictive technology solutions to stop fraud before it happens. When a potential fraudulent transaction is discovered, a temporary block is placed on the card and a notification is sent to the cardholder to confirm the validity of the transaction. The block does not stop the authorization attempt by the fraudster, but it minimizes the potential loss by declining the transaction from being approved.
- Chip-Activated Terminals: Chip cards and chip-activated terminals work together to protect in-store payments. A unique one-time code is generated behind the scenes for the transaction to be approved, a feature that effectively reduces counterfeit fraud.
As a business leader, understanding the common tactics employed by fraudsters and implementing proactive measures is essential to safeguarding your company’s finances in this digital age. A simple conversation with a trusted banking partner can not only create advantages but possibly prevent future issues related to fraudulent transactions that only increase the value of a potential switch.
Business credit cards can add significant value to your transactional framework, and you shouldn’t delay in exploring the associated advantages and opportunities just because a current setup feels comfortable and adequate.
Author: Karah Gagnon is Senior Vice President, Relationship Manager Team Lead at Enterprise Bank & Trust, Member FDIC. She leads Enterprise’s commercial banking team in Arizona by providing strategy and supporting the financial success of clients throughout the state.
