Amidst a rapidly evolving digital landscape, CFOs must navigate the intricate challenge of safeguarding against payment fraud while propelling their companies towards a technologically advanced future
Last year’s e-commerce losses to online payment fraud were estimated at $41 billion, showing how critical it is for businesses to have a robust anti-fraud system in place.
According to new research[1] from Amex, UK businesses spend an average of 7% of annual turnover on fraud protection.
Beyond the substantial hard costs, payment fraud takes away valuable time from employees tasked with dealing with the incidents and can contribute to adverse customer experiences.
Some of the common instances CFOs are seeing include cheque fraud, credit card fraud, access fraud, and ‘spear-phishing’. Being proactive in recognising these risks can lead to more robust financial processes.
“It’s clearly an issue that CFOs are fully focused on,” says Stacey Sterbenz, general manager, UK Commercial at American Express.
“It is becoming more critical than ever for businesses to modernise and update their payments systems as digitising can help companies secure themselves against a range of fraudulent activity.”
There is no silver bullet for finance chiefs looking to tackle fraud; taking payments digital instead of relying on manual methods is often one of the first steps affording B2B firms some protection against fraud threats, but many companies are falling behind in this regard.
Working with an experienced payment partner who can deploy advanced digital security features such as encryption and multi-factor authentication, should be a cornerstone of any response.
But one of the biggest challenges that CFOs face in combatting payment fraud is finding and implementing the right technology. CFOs should work with a payment partner that can create a “bespoke solution based on their business needs,” says Sterbenz.
Sterbenz notes a solution should offer a “comprehensive view” of a business’ spending patterns and activity to help finance teams identify potential risk factors or sudden changes that could indicate fraudulent activity.
One approach has been to centralise payment activity in a single system. Coupled with multiple, standardised and electronic approvals, an integrated payments system allows for a complete and detailed electronic paper trail for all payments, minimising opportunities for fraud.
Standardising settlement instructions is a crucial strategy for CFOs, not just in the realm of investment transactions but also in the more immediate areas of accounts payable and receivable. By embedding standardised settlement instructions into corporate financial systems, businesses can streamline their payment processes, whether it’s for supplier payments, client invoicing, or other financial transactions. This standardisation not only enhances operational efficiency but also serves as a safeguard against the redirection of funds to unauthorised accounts.
“Beyond this, CFOs should ensure all payments systems, software and applications are up to date with the latest security updates to limit the risk of fraudulent attacks,” says Sterbenz.
Amex’s research showed that security tops the list of the most important considerations with regards to B2B payment methods for 60% of senior finance professionals.
Corporations should review their payments-fraud detection and monitoring systems, as well as their protocols to make sure they’re working. Some companies may have the resources to do this internally, but many will find it makes sense to engage a third-party expert to both create defence systems and test them regularly.
Throughout history, fraudsters have demonstrated a remarkable dedication to trying to outsmart their victims, and the advent of new technologies such as social media and mobile shopping, and mobile banking have simply widened the field of opportunity.
While cheque fraud arguably remains the most common type of payment fraud, for example, criminals today are increasingly exploiting the digital technologies that make it faster and easier for companies and consumers to interact with each other.
Sterbenz notes CFOs should not be forced to choose between a great customer experience or robust security; it’s a case of understanding how to achieve both simultaneously.
“One of the first steps to tackling payment fraud is to create an incident response plan,” they add. “A well-structured plan will ensure that those within the business can efficiently respond to fraud tactics, limit the impact on the business and quickly resume business as usual. “
One of the cornerstones of any response plan will involve collaborating closely with your payment provider to ensure they continually assess and update technology that evolves in line with anti-fraud measures.
“Fraudsters are becoming increasingly sophisticated and learning new tactics, and CFOs must make a point to keep pace with their strategies,” notes Sterbenz.
From secure and efficient virtual payments to simple reconciliation processes and much more, American Express® Corporate Solutions keep your business moving. Find out more about how our payment solutions can help.
[1] American Express and Opinium surveyed 750 respondents from UK small, medium, and large companies, split across senior decision makers, senior finance professionals and finance team members who are responsible for payments. Fieldwork was undertaken between 15-23 May 2023.
