Here’s how 1,600 financial decision-makers across GB and the US have navigated the changing payments landscape over the last few years.
After a tumultuous few years, very few businesses have escaped the pandemic unscathed.
Companies have been forced to adapt, reassess and make changes they might not have thought necessary or even possible just a few years ago.
This year’s Bottomline business payments barometer report, now extended to include the US as well as GB, focused on how companies, from small businesses to enterprises, have responded to a rapidly changing payments landscape.
The financial technology provider brought together its general manager of payments and cash management Ed Adshead-Grant and head of market development for risk and fraud James Richardson, as well as Open Banking chair and trustee Charlotte Crosswell and Payments Association advisory board chair Marion King to discuss the findings.
According to the study, 29 per cent of GB and 37 per cent of US businesses fell victim to fraud over the last year.
Additionally, 52 per cent of GB and 63 per cent of US businesses said that they thought there was an increase in insider fraud and collusion with more employees working from home.
“There’s this feeling that we’re all we’re all feeling a little bit beaten,” Richardson said.
“But interestingly, it’s overtaken card fraud, [which] is now on the decline.
“So I think businesses are right to be concerned and worried that they are being targeted.”
Richardson noted that there is probably more technology, education and support programmes than ever before to help businesses, but that that should not have to be the answer.
“It shouldn’t be that it’s the cost of doing business,” he added.
“At what point did it become an okay statistic? That half of businesses accept that we’ve just got to consume the fraud.”
Around 20 per cent of businesses in each country did not even know if they had been victims of fraud, and on average it was found that companies only recover around a third of losses experienced through fraud.
The rise of push payment scams
“I can’t help but feel as an industry a bit shame on us, that this is still out of control, and getting worse,” King said.
“Push payment scams particularly ruin people’s lives. And unfortunately, what we saw through the pandemic was they pick on the vulnerable because it’s an easier target, which I think goes against what all of us stand for, and what we believe in.”
Losses due to push payment fraud were estimated to be around £479m in the UK in 2020 and more than $1.8bn in the US.
“So it’s the weakest link in the chain they go for, be it a person, be it a business, be it an association of some description,” she added.
“What was pleasing, though, from this report, was the level of organisations that really want to take responsibility.”
Looking ahead, 22 per cent of GB and 16 per cent of US businesses said fraud prevention measures would have the greatest influence on business payment processes over the next three years.
“Yes, it is a cost of doing business, but that doesn’t mean we have to accept it,” Crosswell said.
“And I think we really have to take that step back and say, ‘How do we how do we look at this as fraudsters become more savvy, unfortunately, of how to navigate?’
“And for every bit of technology we bring in, there will be another wave of them trying to get around that.”
Next steps for fraud protection
The report was conducted before Russia invaded Ukraine, but shows that even before that businesses wanted to take on more responsibility from banks for sanction checking.
68 per cent of GB and 75 per cent of US businesses said they were prepared to take on more responsibility and not leave it all to banks.
In fact, 70 per cent said they were more willing to do more checks in-house than to go to a bank.
The introduction of the ISO 20022 file format for payment messages should be an important tool in assisting with sanction checking, and promisingly 75 per cent of GB and 84 per cent of US businesses said they have a transition plan for the next three years.
It is still not fully clear though what businesses should be doing and where they should be turning for information.
“For businesses, you used to be able to go down to your bank, you’d have your business relationship manager and that was it, and what they said went,” Crosswell said.
“Obviously what we now know is that wasn’t the right thing, either, and there is now competition out there, there is more transparency.”
A potential solution?
“It wouldn’t surprise me if the next wave of evolution is that we going to see the super apps that get created to help direct people,” Crosswell said.
“So you want to help on tax? Here. You want help on payments? Here. You want help on data? Here.
“And we haven’t quite seen that. So there’s a fintech and anybody out there, that’s what I’d call a call to action is we do need a bit of help in navigating.”
King echoed Crosswell’s sentiments and a call to action in the space, and perhaps even a financial super app.
“We’ve all highlighted how much has changed now, and it’s changing around us, so how do businesses navigate?
“With my Payments Association hat on, it’s made me think probably neutral bodies need to do more, in terms of helping businesses that don’t quite know how to go about this,” King said.