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Cross-border payment fraud a growing headache

The latest issue of Global B2B Payments Playbook, a joint publication compiled by PYMNTS.com and Worldpay B2B Payments finds that 60% of US and UK businesses face cross-border payments fraud.

PYMNTS.com comments that many professionals around the globe have worked from home since theCovid-19 pandemic first developed in early 2020, using their home networks and personal devices to conduct business. They have struggled to rebuild their cybersecurity infrastructures from scratch and attempted to figure out how to protect their organisations’ data. 

Bad actors have taken advantage of this situation by targeting companies while their defences are down. Businesses are keenly aware of the heightened risk of B2B theft and fraud and the impact it can have on their financial stability. Protecting their operations from this threat is among the most pressing challenges that firms expect to face, and many have already learned about these risks the hard way. 

Favourite methods

The report notes that the rapid growth of cross-border commerce represents an enormous opportunity for firms, with US$10 trillion flows between businesses around the world annually. However, many businesses are unable to fully benefit from the benefits as they still struggle with cumbersome paper-based workflows, payment delays and fraud. 

One favourite method employed by cybercriminals is invoice fraud, in which they prey on unsuspecting companies by posing as vendors and emailing bills for work that was never performed. The money is then laundered after being redirected into overseas accounts. Victims are often unaware that they have been scammed until a legitimate supplier subsequently sends an invoice for the same work. 

Another method targeted at business leaders is the capital call scam. Bad actors use emails to impersonate insurance or investment companies and request funds transfers that they claim are part of an investment commitment. The fraudulent documents attached to these emails then prompt targets to enter their payment details, typically requesting larger amounts than those for other types of transfers due to the nature of the transactions. 

Developing defences

With remote working having become more commonplace in the past two years, many businesses are adopting automated accounts receivable (AR) and accounts payable (AP) solutions to strengthen their anti-fraud defences. Firms often approach automation as a multifaceted process — reducing their use of legacy B2B payments such as cheques and wire transfers and increasing their usage of digital B2B payment methods, such as virtual cards, and then automating those digital transactions via integrated enterprise resource planning (ERP) systems. 

The report finds that the main benefit of such digital solutions is the data they can gather and manage at scale. Digitising B2B payments data and managing it via ERP systems enables businesses to automate their security practices using algorithm-based fraud detection. This can enable businesses to spot fraudulent transactions with greater accuracy than manual techniques. 

It concludes that digitising B2B payments in this fashion provides many operational benefits that extend well beyond enhanced payment security, reducing days sales outstanding (DSO), overall delinquency rates and costs. B2B automation offers a powerful tool to help businesses future-proof their payments operations; while leveraging cloud-based ERP tools can serve the dual purpose of making payments faster, safer and more efficient, while also supporting a remote workforce.

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