The tech helping combat costly fraud

The payment line of defence

There’s no better way to reduce fraud costs than to prevent fraudulent charges from occurring in the first place, and payment technology can provide controls to keep purchases in policy and reject illicit purchases outright. The traditional payment and expense management approach, which is still in place for “90 per cent of the market,” is not set up for that, says Center cofounder and SVP of product Nik Singh.

“You have an expense management system that is being populated by and interacting with personal cards that people are manually entering in data or people taking a snap of a receipt that may or may not be legible or disparate corporate cards that don’t connect,” he says. “What that has led to is inaccurate data, which leads to an inability to understand where spend is going, and poor controls.”

Solving for that has been a key driver of recent deepening of connections between fintech companies and travel. Center has partnered with Spotnana, with which it shares investor DNA, to create an integrated travel and expense offering using its card product. In recent weeks, Navan announced a partnership with Brex to launch a payment solution integrated into its platform. Payment and expense platform Mesh launched its own travel management platform last year.

With an integrated solution, companies have the capability not only to issue payment tools to all travellers but also to put controls around those tools, says Singh. Not only might that include spending limits or blocking certain merchant categories – not allowing spending at a casino, for example – but it also gives the ability to tailor payment to employee “personas.” A business traveller, for example, would need the ability to pay for hotels and meals, but the company might want to block procurement purchases on that tool, while a professional services team would need access to pay for fuels and meals but not to book air.

“This concept of being able to limit the types of spend that apply to cards is a huge innovation that drives this pre-spend control process,” says Singh.

Chevalier said companies vary on their requirements and strategies which can drive the different benefits and impact when comparing the all-in-one as compared to the independent providers in terms of assisting in controlling expenses and mitigating risk.

There are other options to have controls at the point of payment. SAP Concur’s Verify auditing service can issue alerts to travellers throughout their trip to head off potential out-of-policy spending, such as if a dinner comes in well over the cost of a daily per diem allowance, says Concur head of market strategy Christopher Juneau.

“As the traveller is spending while they travel, you’re giving travellers alerts to add attendees, make sure you have the receipt or know something is potentially out of policy,” he says. Doing that is delivering a better experience for the traveller but reminding them that the system is watching them as well.”

As virtual card adoption increases, that will bring more spending controls not only in terms of what employees spend but also in reducing the risk of stolen cards, says Emburse chief technology officer Ken Ringdahl. Payment providers, in the meantime, have been honing their own technology in terms of detecting misuse. Even though the liability generally falls to the credit card companies in such situations, that doesn’t mean it shouldn’t be a concern for the travel management side, says Chevalier.

“While the credit card companies may own most of the financial risk of the various fraud categories, it is critical that this is managed collaboratively with all your travel suppliers to assist in the identification of potential fraud but also that there are processes to prevent it,” she says. “We need to prevent fraud while protecting their data and privacy.”

Beyond that, companies should consider the resources involved in trying to track down and report such misuse, says Ringdahl. The cost of fraud is more than the “hard dollar” amounts; there’s also the soft-dollar cost of employee time spent tracking down and correcting it, Singh adds.