Connect with us

Business

How businesses can protect against payment fraud post-COVID-19

Published

on

How businesses can protect against payment fraud post-COVID-19 1

By Pierre-Antoine Dusoulier, Founder and CEO, iBanFirst

 

The impact of COVID-19 on fraud and security

COVID-19 has caused an acceleration in the use of digital technologies across all sectors and areas of the economy. In financial services, contactless payments, digital wallets and online banking have enabled people to conduct transactions and bank safely and securely in lockdown.

The pandemic, however, has also exacerbated fraud and security concerns. The rise of digital technologies and the mass uptake in remote working has created a new challenge for businesses in particular, who need to detect fraud early, and guard against potential cybersecurity threats to protect their customers. 

Described as an 'epidemic within the pandemic,' COVID-19 has enabled cybercriminals to target digitally inexperienced customers and exploit legacy security frameworks – while businesses and customers face a range of personal and professional challenges during these challenging times.

Indeed, in the UK, the number of impersonation scams doubled in 2020 to 39,360 cases according to UK Finance, the banking trade body. In total, £150.3 million was taken from UK bank accounts using this method of fraud, with the average victim losing nearly £4,000.

In France, a report from consumer body UFC-Que Choisir found that almost a third (30%) of bank fraud victims were not reimbursed in 2020, as payment fraud accelerated amid the rise in contactless and digital payments in lockdown.

Identifying fraud risks early

Fighting fraud early is a business critical operation. Fraudsters make no distinction between companies and treat all businesses, from large corporates to SMEs, the same. For SMEs, this can be particularly damaging. Recovering lost funds is a difficult process which creates both reputational problems for the business while also impacting on client retention and profit margins. 

So, how can companies identify fraud effectively to safeguard their customers and their business operations?

Examining consistency of supplier information

There are several methods that businesses can implement to protect against payment fraud. 

Firstly, businesses should always check the authenticity of information from suppliers. For example, this could involve creating automated data processes to approve and monitor the information supplied by individual suppliers, such as bank account details, contact details and email addresses. 

Overall, businesses should focus on the consistency of information received, checking information internally to ensure requests made are valid. The majority of fraud cases could be prevented by creating processes to examine supplier information more closely. This will help to prevent a range of payment fraud, from impersonation scams to changes of bank account details and erroneous invoices.

Fighting fraud through innovation

Secondly, it's important to invest in the right technology to help to prevent fraud from occurring. The rise of digital adoption has fuelled new types of sophisticated fraud attempts, and technology will continue to be the most significant barrier in a company's fraud prevention strategy. 

A vital element of fraud detection is through monitoring customer transactions in real time, and harnessing emerging technologies such as artificial intelligence and machine learning to spot the signs of a scam or fraud before it is too late.

Our Payment Tracker launched in January 2021 – a real-time payment-tracking service for both payers and payees, which leverages the latest tracking technology, to trace our customer's payments, and receive live updates on the status of international payments at any stage of the fund transfer process. The tracker also highlights potential roadblocks or delays along the payment's journey, which increases transparency and provides businesses with safeguards against potential payment fraud.

Meanwhile, leveraging new technologies, such as AI and Machine Learning, will help businesses to remain one step ahead of fraudsters, enabling companies to identify fraud early through mining transactional data for inconsistencies and patterns that bring fraud to light.

Businesses should also introduce two-factor authentication systems for bank accounts, as this ensures that logins are safe and secure for clients at all times.

Prioritising training to eliminate human error

Finally, it is important to provide training for your team. According to IBM, more than 95% of fraud cases involve human error. Prioritising training as a business can therefore significantly minimise the risk of fraud. 

This could include training sessions on how scams are conducted, using relevant fraudulent activity and looking at how to identify inconsistent supplier information to catch fraud early. Indeed, many businesses operate phishing testing internally for employees, to ensure that employees understand how fraud can occur, and what methods can be taken to minimise the likelihood of it happening in the future.

The fraud and the security of payments post-COVID-19

Fraud will continue to be a reality for all businesses and it can pose a genuine threat to the viability of SMEs. The winning combination to protect against fraud is the regular monitoring of inconsistencies in supplier information, a robust security system and training for your team to upskill employees in fraud identification and best practice.

This is more important than ever in a post-COVID-19 world. Payment fraud will continue to rise and be a challenge for all businesses, as the societal shift to digital payments shows no signs of slowing down.

Editorial & Advertiser disclosure

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Newsletters with Secrets & Analysis. Subscribe Now

Newsletters with Secrets & Analysis. Subscribe Now

Newsletters with Secrets & Analysis. Subscribe Now

Recommended