It’s hard to fight payments fraud when you’re not even sure whether it’s happening. Recent research revealed that half of the CFOs, treasurers, and accounts payable professionals surveyed were unaware of how much money their organization lost to payment fraud in the past year. Additionally, 42% didn’t know if their business had been targeted by any payment fraud attempts.
The issue is not due to a lack of effort; most respondents reported having fraud prevention solutions in place. However, they lacked visibility into the frequency and costs of payment fraud.
And it’s not because the problem is going away. In 2023 alone, 80% of organizations fell victim to payment fraud, a 15% increase from the previous year.
Blind Spots
According to The State of Business Payment Security from Trustmi, lack of automation is one of the key reasons why these financial professionals are unaware of payments fraud. Nearly 27% of respondents still rely entirely on manual operations.
This reliance creates gaps in protection, especially when multiple technology solutions need to interact. More than half of those surveyed reported using up to five technology solutions in their payment processes, while 7% relied on 15 or more solutions .
Additionally, many organizations are unprepared for the human element in payment fraud. After human error, the most common type of fraud is business email compromise attacks. In some cases, ACH payment methods have become a primary target in these business email compromise situations.
About a quarter of respondents reported experiencing a hacker attack on their internal systems, while nearly as many faced fraud resulting from social engineering. Other relatively new fraud tactics were the result of executive impersonation attacks and AI-driven deepfake attempts.
ISO 20022 to the Rescue
One of the bright spots on the horizon is ISO 20022, the messaging standard slated to be introduced next year. The protocol’s robust and granular data will help financial institutions detect potentially fraudulent patterns in payments and stop them before they are completed.
For example, checking the name associated with a payment against the name that is on an invoice can reduce fake invoice fraud by 30%. ISO 20022 data will provide many more data points to use to check against potentially fraudulent payments.
