Payment Transaction Fraud Among Key Risks to Business Operations – and Reputation

New research by Creednz in collaboration with the Ponemon Institute notes rising cases of payment transaction fraud are costing businesses more than just money

Payment fraud amounting to billions of dollars remains among the top risks to companies globally, with more than two-thirds of U.S. corporate finance departments reporting some sort of breach that has not only cost them money in the past 12 months but significantly harmed their reputation.

“A manual process leads to fraud, and those that get blamed are the ones who literally clicked the ‘send’ button”

The data was released today in a report from Creednz, a platform that safeguards corporate finance teams from payment scams to prevent financial loss, alongside the Ponemon Institute, helmed by Dr. Larry Ponemon, a former senior partner at PWC and founder of the firm’s global compliance risk-management group. Key findings included that 88% said their organizations had at least one payment transaction fraud in the past two years, while 76% of respondents say it took more than a month to more than a year to discover and remediate these incidents.

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Beyond losing capital, the number one negative consequence following a fraud incident is reputational damage with business partners and consumers, with 60% of survey respondents reporting a hit to their reputation and brand. This is followed by non-compliance with regulations (51% of respondents) and loss of shareholders’ confidence (46% of respondents).

An additional negative: More than one-quarter of respondents said they fired employees that made the payments, highlighting the highly manual process involved in processing payments, and in turn the large margin for human error.

“A manual process leads to fraud, and those that get blamed are the ones who literally clicked the ‘send’ button,” noted Creednz Co-founder and CEO Johnny Deutsch. “It makes no sense in today’s world that technology isn’t being utilized and applied to prevent this in the first place. Creednz was built from the ground up to give finance teams the tools to fight back and protect against payment fraud and safeguarding corporate finances.”

“Our research revolutionizes this landscape by providing valuable insights for companies to recalibrate their risk focus. By shedding light on the accountability aspects of payment scams, we bridge the gap between finance and cybersecurity departments, revealing how these financial challenges squarely fall within the purview of corporate finance,” said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute.

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Other report highlights include:

• By 2028, the value of business transactions worldwide is expected to increase to $200 trillion, according to Deloitte’s 2020 B2B Payments for the Mid-Market;
• Sixty-one percent of respondents say payment policies are applied consistently without consideration of risk, location and the length of time the relationship has lasted;
• Sixty-eight percent of financial professionals do not believe their banks will verify and stop suspicious transactions;
• More than a quarter of respondents said they fired employees after fraud occurred, in most cases the individual and department that processed the transaction;
• Seventy six percent of financial professionals say they are concerned about the potential of fraud when making payments to regions outside of the U.S. and Canada.

Separately, Creednz is pleased to announce that it has finalized a $7 million fundraising round led by Blumberg Capital with participation from Elron Ventures and Moneta VC. The funds will be used for growing the team, continued product development and executing in the marketplace.