Protecting Your Business From Fraudulent Payment Activity

Payment fraud is a big problem for businesses, particularly in the online era; the ACCC estimates that Australians lost over $850 million to scams in 2020, a 34% increase on 2019. Whether it’s stolen credit cards or data hacking, online fraud is rife. Online purchases now account for a significant portion of fraud losses, so it’s more important than ever to protect your business.

Choosing a safe and reliable payment method for your business is crucial if you want to avoid losses to fraud. Keep reading to learn how you can mitigate fraudulent payments and protect your business.

What is online payment fraud?

In general, online fraud refers to an individual stealing another’s confidential information, including card details, and using it to make online transactions.

Alternatively, a criminal could make a transaction and initiate a chargeback at a later date, claiming they never received the items or that the items were faulty. Only the business suffers due to this type of fraud, incurring a loss of products and usually paying out on top of that.

Businesses should therefore aim to protect themselves from this form of friendly fraud with a built-in digital fraud solution that monitors transaction activity. You can also implement a smart dispute management solution that looks into purchasing history before issuing a chargeback.

Various other types of fraudulent activity exist, including:

Phishing: the person elicits private information from the victim by tricking them into handing it out.
Cyber attacks: criminals hack into databases to retrieve credit card information, using the stolen cards to make online transactions.
Bank transfer scam: fraudsters pretend to be interested in buying goods and ask what bank account to transfer the money to; then, they find someone willing to buy the same goods and trick them into transferring money to the account. The criminal receives the goods, and somebody else pays.
Friendly fraud: the fraudsters make a purchase, then request a refund by declaring that they never received the items.
Clean fraud: hackers figure out what security measures a business has in place, then use stolen information to navigate around the anti-fraud security.

There are other things to watch out for, too, including ad fraud. Business competitors repeatedly click on your Google ads, driving up the cost of your marketing budget. Eventually, this can lead to Google ads account suspensions, preventing you from marketing efficiently.

Payment fraud can vary from large-scale identity theft to an individual making one fraudulent transaction. It’s crucial for businesses to protect themselves against all types of fraud, especially since the practice is so common. In the 2020-21 financial year, 6.9% of Australians aged 15 and over experienced card fraud, and businesses have an obligation to try and protect customers where they can.

How common is fraudulent payment activity?

In 2021, global losses to online payment fraud were estimated at US$20 billion. It appears credit card fraud is on the rise, and business owners need to be aware of it. During the pandemic, lots of businesses moved online quickly, without implementing the proper security measures.

Hackers saw an opportunity, and card-not-present fraud began to increase. It became a lot easier to take confidential information without ever needing to cross paths with the actual cardholder. It is perhaps the most common type of online payment fraud right now.

Fraud is an enormous market, which is why all businesses should take measures to mitigate the risk. At the end of the day, companies have a responsibility to their customers as well as to prevent losses for themselves.

How common is fraudulent payment activity?

What businesses are susceptible to payment fraud?

All organizations are susceptible to fraudulent payments. The AFP found that 82% of businesses experienced suspicious payment activity in 2018, and although larger companies were the most vulnerable, small businesses were also susceptible. What’s more, payment issues can hit small companies much harder.

It is not only for consumer-focused companies, either. B2B companies experience high rates of fraud, too. An astonishing 98% of B2B companies in one study reported fraud attacks in 2021.

Essentially, every single business owner should have anti-fraud measures in place.

How to protect your business

There are plenty of ways to safeguard a company from online fraud. Here are four simple steps you can take to ensure that your payments are protected.

1. Educate yourself and your staff

The first step is to do plenty of research; make sure you understand all the ways fraud can take place, and what you can do to mitigate the risk. You also need to ensure that all staff understands the risks of fraud and what they can do to prevent it.

Educating staff includes informing them of all data protection policies, what types of scams are taking place, and what the legal requirements are surrounding the protection of confidential data.

2. Use a fraud management system

An enterprise fraud management (EFM) system tracks transactions and looks for any suspicious payment activity. Plenty of systems are available that can monitor all transactions, and they are often better at catching a potentially fraudulent payment than the human eye. Although your staff should be aware of fraud, an anti-fraud detection system is perhaps even more crucial.

Make sure you select a fraud management system that suits your business. For example, it should fit your budget, offer integration with other platforms to keep your accounts linked, and provide real-time analysis.

3. Partner with a verified payment processor

You should also partner with a verified payment processor such as B2Bpay that protects customer data by:

Not storing full card numbers
Complying with PCI Data Security Standards
Encrypting information

Many payment processors can also detect suspicious payments when the user enters card information, redirecting individuals to pay via their mobile banking or checking the information against data stored by their bank.

A payment processor should also allow complete integration with your other business accounts and plug seamlessly into your website.

4. Implement data protection policies

For e-commerce businesses, data protection is particularly important. Make sure you have a policy that outlines everything you intend to do to protect consumer data, from firewalls and encryption to your business plan in case of a data breach.

Customers should feel secure shopping with you, which means everything from their shipping address to their banking information is protected. Not only does this protect your organisation in the event of an emergency, but it also boosts business because potential customers feel safer about entering their information and making purchases with you.

Final thoughts: How B2Bpay can help

Company owners of all sizes should strive to protect the payments on their sites. Partnering with a payment protection service is one simple step you can take to ensure everything runs smoothly.

B2Bpay can help by offering all the security measures outlined above, alongside seamless integration with the accounts linked to your business, including Xero and MYOB.

Learn more about how B2Bpay can help your business below:

Making payments with B2Bpay.

Receiving payments with B2Bpay.

B2Bpay security measures.

Protecting Your Business From Fraudulent Payment Activity

What is online payment fraud?

How common is fraudulent payment activity?

How common is fraudulent payment activity?

What businesses are susceptible to payment fraud?

How to protect your business

Final thoughts: How B2Bpay can help

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