Despite increasing levels of awareness and precaution, the impact of payment fraud in the UK is on the rise.
Some 87% of UK businesses say they are unable to recover more than half of their payment fraud losses. Moreover, the figure rises to 93% among small and medium businesses.
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By GlobalDataThe UK average financial loss through fraud sits at £240,092. The majority of payment fraud losses have increased from the £10,000-£49,000 bracket in 2018 to between £50,000 and £250,000 in 2019.
The statistics revealed in Bottomline’s fourth annual Business Payments Barometer.
The report reveals that external cyber fraud continues to draw the most concern. 78% of respondents are concerned either ‘a fair amount’ or ‘a great deal’ about such an attack impacting their business.
Financial decision makers are also concerned about being deceived into making a fraudulent payment (68%). And some 61% are concerned about insider fraud and collusion taking place within their business.
Payment fraud: regulatory clarity
Many respondents to the Bottomline survey say they do not understand new industry initiatives to combat fraud. For example, 54% of those questioned are unaware of the benefits of Open Banking (54%). The New Payments Architecture (51%) and ISO20022 (52%) fare little better.
Thus, many businesses risk missing out on the opportunities that new regulations can provide.
Specifically regarding Open Banking, only 17% of financial decision makers cite their preparedness to embrace the new model.
“Open Banking has the potential to free up time previously spent on back office activity,” says Nigel Savory, MD, Bottomline.
“For example, small businesses can easily gain access to their different banking transactions, balances and history through trusted organisations. Those yet to embrace the new model could potentially risk falling behind the frontrunners when it comes creating efficiencies. Likewise, they could be offering new value-add services to their customers.
Real-time payments to become industry standard
Over one-third (37%) of financial decision makers say their businesses plan to adopt real-time payments within the next 12 months. Around 53% of those surveyed have already adopted real-time payments. This suggests that around 90% will have implemented real-time payments by the end of 2020.
“Real-time payments bring heightened visibility and efficiency to the payments landscape. It will be especially impactful for SMEs looking to improve cash flow and have debts settled more quickly,” adds Savory.
“The technology has been in place since 2008. So smaller companies have begun to expect the same payment experience they are accustomed to as consumers.”
Brexit and changes in trading environment
With Brexit unresolved, respondents rank ‘Changes in trading environment’ as the second greatest influence on payment processes in 2019-2020.
In particular, businesses previously outsourcing services to continental Europe are renewing their contracts on a much more short-term basis. In other words, they are pursuing a ‘wait-and-see’ strategy.
Notably, some 25% of financial decision makers plan to stop making international payments. However, this is offset against 53% who intend to continue and the 10% that intend to start making international payments.
Fintech Bottomline Technologies provides software as a service based solutions. Its business segments include Cloud Solutions, Banking Solutions and Payments and Transactional Documents.
For the quarter to end March, Bottomline reported revenue of $106.4m, up 5% year-on-year with net income of $0.8m compared to a net loss of $1.0m for the year ago period.
