Lock down your payments management with chip-enabled cards

New technology makes corporate credit cards and p-cards even more attractive

Make no mistake: Credit card fraud is a big deal. The Nilson Report, a leading publication covering the credit card industry, found that worldwide fraud losses on credit, debit and prepaid cards reached $16.31 billion in 20141 . But a new technology currently expanding in the United States promises to make transactions far more secure. EMV-enabled cards, commonly known as “chip cards” or “smart cards,” contain embedded microprocessors that encrypt sensitive information. The arrival of EMV technology makes corporate credit cards and purchasing cards an even more attractive option for streamlining your business’s payables processing.

Here’s what you need to know:

  • Chip cards are safer cards. Nearly half of all card fraud is the result of counterfeiting. Fraudsters intercept data transferred from a card’s magnetic strip to a merchant terminal and typically sell this information — which is sufficient to make purchases — on the black market. “EMV technology provides the strongest protection available against fraud from counterfeit cards,” explains David LaPaglia, vice president, commercial card product manager at Regions Bank. Unlike those involving magnetic stripes, every chip card transaction requires the exchange of multiple encrypted data points between the card, the terminal and the processor. This makes counterfeiting far more difficult.
  • Magnetic stripes have not gone away. Along with chips, today’s EMV chip credit cards also typically come equipped with magnetic stripes, just like the ones on your old cards. So they can be used for both chip-based and magnetic-stripe-based transactions. EMV chip technology provides additional security when EMV-enabled terminals are used. But not all merchants or ATMs have chip-enabled terminals, and online transactions will continue to be processed the usual way (though many strides are being taken to improve the security of these transactions, as well).
  • Cards are safer than checks. One of the weakest links in the payables process is the traditional paper check. In fact, 82% of respondents to a 2014 Association for Financial Professionals (AFP) survey identified paper checks as the primary target for fraud attacks2. As a result, many companies are turning to credit solutions such as corporate travel cards and purchase cards (p-cards). “These cards are tailored to specific needs, whether individual travel and entertainment or back-office accounts payable,” LaPaglia says. “For example, you can configure each card to conform to company policy in terms of spending limits, vendor categories and other criteria.”
  • Paper checks are expensive. “There is a lot involved in check processing, such as distribution, error checking and reconciliation that results in higher labor and other costs,” LaPaglia says. In fact, the cost and time to process a paper check can be as much as four times that of any form of e-payment, including cards3. With corporate and p-cards, explains LaPaglia, much of this processing is handled automatically, and it can often be integrated directly into your company’s accounting or enterprise resource planning (ERP) software, reducing time and error.
  • You can save even more. In addition to reduced operational costs, purchase cards allow your company to capitalize on early-payment discounts by streamlining processes. A 2013 study by the Aberdeen Group found that the average organization is only able to benefit from 66% of their contracted discounts due to inefficiency. Extensive reporting capabilities also permit greater visibility into spending by vendor, arming you when negotiating more favorable terms. And finally, many banks — including Regions — offer a form of revenue sharing by providing cash back to your organization based on annual purchase volume.

Does your company take advantage of all that corporate and purchase cards have to offer? With the arrival of EMV technology, maybe it’s time to take a second look.

1. http://www.cutimes.com/2015/08/05/card-fraud-losses-hit-16-billion-worldwide?slreturn=1454605192
2. Association for Financial Professionals, 2014 AFP Payments Fraud and Control Survey, 2014
3. Ardent Partners, ePayments Rising: The 2014 Market Report, 2014

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This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.