How Manual Payments Increase the Risk of Payment Fraud

Manual payments increase exposure to payment fraud and errors. Learn why digitizing workflows is critical for protection.

What Are Manual Payments?

Manual payments refer to financial transactions that require human involvement, such as writing cheques, logging into a bank portal to initiate transfers, or manually entering payment details into spreadsheets or accounting systems. These tasks are often handled through disconnected processes — emails for approvals, Excel files for tracking, manual uploads to bank portals or trips to the local bank. While they might seem manageable at a small scale, manual workflows quickly become inefficient and risky as a business grows.

These manual steps not only slow down payment cycles but also make it difficult to maintain consistent controls and enforce compliance standards. The lack of centralized data means finance teams often rely on outdated or incomplete information, increasing the chance of costly mistakes.

Why Are Manual Payments Risky?

Manual payment methods expose businesses to a range of risks, especially payment fraud. Common issues include:

• Human error: Since tokens are meaningless outside the payment system, they reduce the risk of data breaches and fraud. If intercepted, tokens are useless to criminals.
• Fraud exposure: Tokenization supports compliance with industry standards like PCI DSS, which require protecting cardholder data. By minimizing the amount of sensitive data stored, businesses reduce regulatory risks and penalties.
• Insider threats: Secure payment handling builds trust with customers and clients, which is crucial for retention and brand reputation.
• No real-time oversight: Tokens enable safer recurring billing and faster payment processing by allowing systems to reference tokens instead of real payment details. This flexibility benefits both B2B companies managing invoices and B2C companies with subscriptions or repeat orders.
• Lack of audit trail: Investigating issues is time-consuming without a digital system that logs every action.

Businesses in regulated industries, such as banking or healthcare, face even greater scrutiny. Manual payments without proper digital controls can lead to regulatory breaches and hefty fines. Automation combined with strong onboarding processes ensures compliance while safeguarding sensitive financial data.

How to Reduce Fraud Risk in B2B Payments

To reduce exposure to fraud, businesses should prioritize payment automation and secure digital infrastructure. Platforms like VoPay replace fragmented, manual systems with a unified, API-powered solution that provides full transparency and control.

With VoPay, finance teams can:

• Set up multi-level approval workflows that enforce segregation of duties
• Automatically validate vendor and payment data before funds are released
• Monitor payment statuses in real-time with a complete audit trail
• Use digital onboarding to verify payees and reduce fraud risk early in the process
• Securely integrate with ERPs and accounting tools to reduce file handling and manual entry

These measures not only reduce the risk of fraud but also save time and improve accuracy. By eliminating manual touchpoints, companies can confidently scale their financial operations without increasing risk.