Businesses of all sizes have been hit hard by fraud, and only 32% of fraud losses have been recovered in Great Britain (GB) and the United States (US)
The shift to a cashless economy accelerates, with 1 in 5 businesses in Great Britain and 1 in 4 in the United States no longer accepting cash
International payments recover from Covid-19, as 59% of businesses in the US and 48% in GB say that they will continue making international payments in 2022 and beyond
Bottomline, a leading provider of financial technology that makes business payments simple, smart, and secure, revealed today that the shift to hybrid working has left businesses seriously exposed to insider fraud1, with over half of businesses (52% in GB and 63% in the US) falling victim over the last year. These levels are likely to be significantly higher as many businesses are unaware that they have fallen foul of insider fraud, with rates expected to increase further as hybrid working becomes a permanent workplace fixture. The findings stem from Bottomline’s seventh annual Business Payments Barometer, which for the first time tracks the sentiment of US businesses, alongside their GB counterparts.
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Across the board, businesses of all sizes in GB and the US have been seriously hit by fraud, with estimated losses up significantly. This is especially true for small and medium-sized GB businesses who saw fraud losses rise to 53% and 63% respectively, following a decrease in fraud losses the year before. In both GB and the US, only 32% of fraud losses are recovered on average, and worryingly, only 2% of small businesses in GB recovered more than 50% of their losses.
Faced with this significant increase, the industry is fighting back against the fraudsters. The roll out of Confirmation of Payee (CoP) in the UK is helping to stop the rise of Push Payment Fraud, which has taken over card fraud as the biggest issue in the industry, with losses of £355 million estimated for the first half of 2021 in the UK2. Worldwide, the adoption of ISO 20022 to strengthen fraud controls is well underway, with 75% of businesses in GB and 84% in the US saying they have a plan for the transition to ISO 20022 over the next three years.
“Businesses, especially SMBs, have been seriously caught off guard by Covid-19 and hybrid working, leading to an unprecedented wave of fraud that hasn’t been seen for years,” said Paul Fannon, Managing Director, Global Business Solutions at Bottomline. “If we are to reverse this worrying trend and stop fraudsters in their tracks, the industry needs to work together to accelerate the roll out of initiatives such as CoP in the UK and educate businesses on how they can detect fraud before it’s too late.”
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International payments rebound following Brexit and Covid-19
Following a steady decline year-on-year due to concerns around Brexit and Covid-19, international payments appear to be slowly recovering in GB with 73% of businesses currently making outbound international payments – up from 69% in 2021. Despite this, many businesses are still having difficulty tracking payments (39% in both GB and US), and international payments continue to fail due to suppliers not passing sanctions checks (19% in GB, 35% in the US). This trend is likely to increase over the next year due to the ongoing crisis in Ukraine, which has led to a rise in sanctions. Interestingly, 68% and 75% of businesses in GB and the US respectively have indicated that they are willing to take on more responsibility from the banks for sanctions checking to help ease the burden.
To help manage these challenges, businesses will need to adopt technology solutions that ease the tracking of payments, such as the SWIFTgpi Tracker, and deal with the mountain of sanctions that are becoming more prominent and complex by the day.
In addition, businesses are starting to show interest in Central Bank Digital Currencies (62% in GB and 76% in the US), which have the potential to revolutionize cross-border payments and solve these pain points by making them quicker, cheaper, traceable, and more efficient.
While less than half of GB businesses expect to use blockchain, cryptocurrency or CBDCs in the next 3 years, two in three of their US counterparts plan to use blockchain to facilitate payments within the same time, specifically smart contracts.
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