There can be little doubt that technology has changed people’s lives for the better. In the business world, it’s helping streamline processes that would have previously entailed hours of manual labour and giving rise to some truly revolutionary companies that are revelling in the digital age. However, despite the excitement surrounding the rapid advance of technology, it also carries a number of significant threats including cybercrime and payment fraud.
According to a new study by Sage Pay, the payment service provider, SMEs are losing £18bn every year to fraudulent transactions with almost a third of businesses admitting that they don’t spend any money on fraud prevention. The findings from Sage Pay’s 2015 Payments Landscape Report go on to reveal that more than a third of businesses have experienced fraudulent activity in the past year, with each losing an average of £3,450.
Given that 55% of the consumers surveyed by Sage Pay cited security as their top priority when it comes to payments, it’s relatively easy to grasp why a failure to invest in fraud prevention can be such a costly oversight for SMEs. And, even among those companies that are investing in fraud protection, their average annual investment of £1,881 is actually half the average cost of fraud, suggesting that businesses aren’t going far enough to safeguard their transactions and, more importantly, their revenue.
“This study shows that fraud continues to be a major issue not just for the UK’s small businesses, but a big concern for consumers too,” said Sean Wilson, managing director of Sage Pay UK. “Ignoring it not only puts your business at risk, it can also drive away customers who are already sceptical about shopping online due to security concerns.”
For businesses that wouldn’t know where to start when it comes to tackling fraud, Sage Pay has provided the following five-step guide:
1. Analyse customer information and purchasing behaviour to assess a customer’s profile, order and delivery details before accepting a transaction.
2. Beware of orders that are placed late at night or early in the morning and orders of high quantity or value, particularly if the product is easily resalable.
3. Always check that the delivery address is valid. Businesses can use the banking industry’s Address Verification Service, which compares the delivery address provided for the order with the billing address details for the payment card held by the card issuer.
4. Invest in geo-location technology to find the shopper’s exact location and help identify whether the order is coming from a high risk country.
5. Maintain a fraud database to track breaches and help close loopholes – criminals will continue to target a business until the window of opportunity is closed.