B2B Payments

Deep Dive: Safeguarding B2B eCommerce And The Corporate Customer Experience

B2C trends are bleeding into the B2B space and forcing corporate sellers to become digitally savvy — and fast.

Corporate buyers are also consumers, meaning they are accustomed to eCommerce’s ease and now expect the same conveniences at work. The trend is unlikely to abate as younger generations gain greater influence in corporate buying.

Forty-four percent of 200 millennials surveyed last year stated they were wholly responsible for making purchasing decisions at the B2B companies at which they worked, and an additional 33 percent played some role in this process. The survey also found that 55 percent of millennial B2B buyers cited good digital purchasing experiences as very important influences when deciding which vendors to use, even if they were equivalent in terms of cost, quality and other factors.

Vendors looking to appeal to these corporate buyers’ shopping preferences and expectations must therefore ready online sales channels like merchant websites and B2B marketplaces.

There is plenty of opportunity as B2B eCommerce is expected to reach $1.1 trillion by 2020, but new sales channels also invite emerging fraud forms. The stakes are especially high in the B2B space, where large-volume transactions worth thousands of dollars are the norm.

Businesses unable to safeguard their online shopping channels risk losing money to criminals and souring legitimate client relationships. More than $1 trillion is expected to be spent on cybersecurity solutions worldwide between 2017 and 2021 as companies address the need for protections and make major investments in digital fraud-fighting techniques. They must do so judicially or risk wasting those investments, however.

This month’s Deep Dive examines the key fraud forms threatening B2B eCommerce as well as the strategies being implemented to overcome them.

The Sizable Online Fraud Threat

Vendors do not always find the transition to online selling to be easy. Sellers may be used to connecting with corporate buyers on the phone, at trade shows or through other face-to-face opportunities where personal interactions can help reassure them that clients are who they claim to be. eCommerce forces vendors to trust strangers they may never meet. B2B merchants must quickly determine remote potential buyers are who they say, a process typically achieved through data collection and identity verification solutions.

The internet provides bad actors with plenty of opportunities, meaning companies’ verification methods must be robust. Fraudsters can appear legitimate by impersonating real businesses, for example, searching online for publicly available details like corporate executives’ addresses and phone numbers, and then supplying this information — with some digits or letters changed — on order applications.

Vendors are unlikely to notice these subtle changes, and altering details ensures the executives are not contacted to ruin the scam. Criminals might use faked credentials to sign up for monthly purchasing plans, gain services for 30 days, and then vanish once the first bill arrives. Business identity theft is used to launch everything from purchasing plan scams to tax and credit card application fraud, and it caused an estimated $137 million in damages in 2017.

Detecting Fraudsters

Sellers seeking to fend off such scams need to differentiate fake accounts from legitimate ones. B2B vendors may safeguard their shopping experiences by requiring customers to undergo robust know your customer (KYC) checks. That could mean asking would-be clients to submit their government-issued IDs for review and comparison against selfie photos to confirm that the individuals making the purchases are indeed those depicted on the IDs.

Vendors must be attuned certain red flags that indicate a need for more in-depth verification. Some fraudsters masquerade as companies that have been inactive for a while but have strong credit reports, meaning firms that suddenly become active after long dormancies may merit more review.

These and other business ID thefts are sizable issues. One study found a 46 percent increase in reports of such attacks between 2017 and 2018. eTailers should regard any mismatches between data supplied by would-be buyers and that available online as prompts to request additional credentials, like utility bills or other physical documentation.

False Positives and Data Security

Online merchants must also be careful to ensure their fraud-fighting systems work without mistakenly sweeping up honest customers. Unfocused anti-fraud solutions as well as customer errors — such as mistyped data — can trigger false positives. Sellers must fine-tune their tools to keep criminals at bay without also creating frictions and delays that dissuade honest corporate shoppers. A 2019 PYMNTS survey found that 60.8 percent of online B2C and B2B platforms’ payment executives cite too many false positives as one of their greatest challenges to winning customers — 30.4 percent said this was their most onerous problem.

Vendors can reduce such frictions with fraud-fighting methods that are more invisible to buyers, like taking advantage of digital purchasing to gather extra information about transaction participants. Sellers can examine purchasers’ device IP addresses to determine whether those used match the buying companies’ geographic locations.

Merchants can also turn to their card networks for support when deflecting card-not-present (CNP) fraud, preventing interruption to customer experiences. Some card networks leverage their machine learning (ML) capabilities to better understand merchants’ and their repeat customers’ typical behavioral profiles, thus enabling easier and more rapid detection of abnormal activities. These services may require vendors to provide them with detailed transaction information, such as shipping and IP addresses as well as contact information. Card networks may also make tools for validating buyers’ names and addresses available, helping alert vendors of suspicious entries early, before goods have been sent out.

No anti-fraud strategy is a cure-all, however, and even security measures bring risks.

Businesses collecting ample data can be more confident in their authentication methods and less likely to accidentally flag legitimate customers as fraudsters, but these rich supplies of data are also tempting targets for hackers. Cybercriminals are eager to make off with valuable customer credentials they can use to perpetrate scams, and more than 7.9 billion business and customer records were stolen in breaches between January 2019 and December 2019. Sellers must therefore put robust cybersecurity protections in place to foil such cyberattacks.

B2B commerce is expanding to web browsers and corporate buyers’ phones, meaning vendors must act to remain relevant. Providing secure online transactions is no easy task — certainly not one to be taken lightly — as fraudulent transactions can cause companies to lose critical dollars and buyer-supplier trust.

Taking eCommerce into its next stage requires B2B sellers to have robust data strategies that better thwart attempted fraud, keep that data safe from hackers, and prevent security measures from imposing painful customer experience frictions. B2B eCommerce exposes participants to influxes of new fraud risks, but companies cannot afford to sit on the sidelines and watch market trends advance without them. Balancing robust security and seamless B2B purchasing experiences will allow ambitious vendors to get ahead.

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PYMNTS LIVE VIRTUAL PANEL: WHY SWIFT GPI IS JUST THE BEGINNING 

On Tuesday, March 31, 2020 at 9:00 AM (ET) join PYMNTS CEO Karen Webster and panelists Vincent Kilcoyne and Roland Brandli of SmartStream for an in-depth discussion on the need to use transformative digital strategies to remain relevant in today’s challenging financial landscape. The discussion will cover strategies that will allow clients to improve operational control, reduce costs, build new revenue streams, mitigate risk and comply accurately with regulation.

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