A study by the accountancy software providers Sage Pay has found that 40% of businesses have been victims of fraud in the past 12 months, costing each one £4515 on average.
Research published as part of Sage Pay’s Payments Landscape Report found that, despite the high risks, two fifths of businesses take no action to protect themselves against fraudulent behaviour, whilst a further fifth do not know what prevention measures they are taking.
But Sage Pay CEO, Simon Black, points out that simply stepping up security measures might not be the answer. “Eradicating fraud completely could be damaging for a business,” he said. “Experiencing no fraud may mean controls are too tight and legitimate transactions are being rejected. Many businesses simply void the transaction immediately if they suspect fraud, rather than undertake further checks. In doing so, they’re likely to be turning away genuine customers who have simply entered their details incorrectly.”
Instead of voiding orders or adding off-putting extra steps to transactions, says Black, businesses should focus on finding smarter ways to identify fraudsters. Fake addresses, orders from “high risk” countries and expensive purchases made in the early hours are all common traits of fraudulent behaviour. SMEs who sell their products online should invest in technology that helps them stay alert to these factors, recommends Black.
“These measures will go a long way to protecting merchants against online fraud via stolen cards and identity theft,” he said. “The other key area to combat fraud relates to the security of websites in terms of cyber-attacks and data breaches to obtain customer card numbers.”