Business Payments Fraud Remains Top Concern Among B2Bs

Inflation may be inescapable but research shows businesses are actually more worried about fraud.

According to the “B2B Payments Fraud Tracker,” from PYMNTS and nsKnox, worries about payments fraud was the number one concern for businesses.

While surprising, this top-of-mind concern is well-founded, given that fraud against businesses rose by more than 134% in Q1 and affected 98% of business-to-business (B2B) firms — a far greater level of exposure than the more closely followed consumer rates.

The costs of B2B fraud also run deeper than just theft, as the study found that this fear factor caused 54% of B2B businesses to intentionally turn down and not onboard a new client at least once last year due to concerns over potential attacks.

Contrary to conventional wisdom, big companies — despite all their capital and access to tech — actually fared worse than their smaller rivals when it comes to being hit by payments fraud.

Then there is the issue of payments risk, the foremost B2B concern that also carries an evolving threat of sorts.

According to Nithai Barzam, chief operating officer of B2B anti-fraud FinTech nsKnox, new categories of payments are also opening up new risk typologies.

“Everybody talks about faster, real-time immediate payments,” Barzam said. “This is great to be able to pay quickly, and definitely great to receive money quickly, but it also opens the door for what’s known as ‘faster fraud’ and closes the window on the time to confirm compliance within anti-money laundering regulations and anti-terror financing regulations.”

On the other side, he said, fraud rings are running business-like operations that invest heavily in technology and develop new processes to conceal or fake identity and avoid detection.

“They’ll try to figure out what makes sense and what to invest in,” he cautioned.

The Response

Clearly, the problem is vast and deep and deserving of a sizable response that is seeing many businesses launch new initiatives.

To that point, PYMNTS research shows that 71% of organizations plan to implement new automated digital solutions for fraud prevention when managing business payments. At the same time, less than one-third of businesses said they were satisfied with their current B2B identity verification and fraud prevention solutions, suggesting an uptick in investment is likely to follow given the outsized worries that accompany them.

Depending on the business and the nature of the threats, different responses are likely to be taken to the detect criminal activity.

In the case of money laundering attempts, for example, where a seemingly honest business relationship could be a front for something far more nefarious, implementing AI-driven fraud detection tools to identify and block potentially fraudulent business transactions is one response.

These automated fraud-detection tools use AI to analyze transactions for potential risk factors. When used during onboarding or as a screening tool in B2B payments management, they can help businesses thwart potential attacks before they impact user experience.

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