How Important is Payment Security?

On our taxes this year we owe the state of Illinois. The organization that performed our taxes warned me to place the check inside the USPS office and NOT in a remote USPS box or your mail box. Why? SECURITY.

Check Fraud Isn’t Going Away

The Financial Crimes Enforcement Network (FinCEN) recently released a warning financial institutions about a nationwide surge in check fraud. And the first target is not the buyer or the supplier being paid but the middleman that links the two businesses. The United States Postal Service (USPS), namely their carriers and mailboxes, are the main target of check fraud criminals.

Mail carriers nationwide face criminals, sometimes armed, looking to take business checks. They are also after the arrow keys that open the blue USPS collection boxes. The criminals also use the keys to get into cluster boxes, large, grouped mailboxes typical of apartment complexes or commercial properties. They know that checks are mailed to and from business complexes. This could contribute to the increase in theft and mail carrier attacks near those locations.

?Paper Checks Are the Main Target

Theft is a problem for USPS carriers. But what’s stolen can be a problem for businesses. Attacks against the USPS specifically target paper checks. There’s been a?23%?increase in check fraud from 2020 to 2021, and the trend continued into 2022 and 2023.

Stolen checks interrupt business. The supplier waiting for payment will have to wait even longer. And the company that makes the paper check payment that gets stolen could be fined by their suppliers for late payments. Then businesses must contend with the possibility of account fraud. Checks can be washed, removing the original business name, and new fraudulent business names can be added, or the checks can be deposited into false accounts.

Criminals also use business checks for counterfeiting, where they print checks that look like legitimate versions of your bank’s checks. Considering that one of your company’s checks provides all the most valuable information – bank account number, routing number, address, phone number, and even an authorized signature – it’s obvious why checks are a prime target for committing fraud.

The fact that theft and check fraud are on the rise should give businesses that have not yet automated their payments a reason to consider making the upgrade. Ultimately, automated payments such as?virtual cards?are a lot safer than paper checks.

?Security of Virtual Card Payments

There’s nothing to mail with virtual cards, so mail theft is not an issue. Even though credit cards can be lost or stolen, virtual cards cannot. Virtual cards are digital and used in place of physical credit cards. They are generated for a specific payment amount or supplier, are valid for a limited time, and can only be used once.

Because a virtual card’s “credit card number” is a 16-digit code generated for a particular purchase, no personal or business information can be seen or stolen. And the conditions set when the virtual card is generated mean that even if the numbers were somehow stolen, they couldn’t be used outside of the intended purchase.

?Fintech Partner Must Have Security Expertise

When you automate your B2B payments get a fintech partner that understands the importance of security. For example, get the highest level of encryption for your data when transferred between locations.

They should also have the highest Payment Card Industry Data Security Standard (PCI DSS) compliance. Credit card companies set PCI guidelines to help protect the cardholder’s data. As a result, payment and transaction security compliance are mandatory to protect your business’ data and ours.

Partners should also invest in independent audits to ensure they meet the Standards of Controls (SOC) for SOC 1 and SOC 2. The reports from these audits offer insightful information about internal controls, governance, security, and risks. A SOC type 2 report evaluates the effectiveness of these controls over time. They should take compliance seriously companywide and require frequent security best-practice training for every employee.

It's critical that your sensitive financial information is safe. Pay your suppliers with confidence, quickly, efficiently, and securely. No late check deliveries, no lost or stolen checks, and no check fraud. Stop taking a chance on USPS for your company’s payments.

Virtual cards don't just benefit your business. They benefit suppliers where more and more suppliers are now accepting virtual cards.

The top five supplier benefits of accepting virtual cards

1. Receive payments faster, more convenient
2. Save time and money
3. Rich payment details
4. Secure, fraud prevention
5. Enhanced buyer-supplier relationships

Ernst Consulting Group is designed to educate and consult B2B companies on new and innovative AP Fintech initiatives. We provide Best-in Class customer experiences and partnerships allowing companies to minimize effort and maximize revenue and efficiencies.

Contact Information:

Jeffrey A Ernst - 815.354.6105 / [email protected] / www.ernstcg.com