How small business are counting the cost of fraud
Fraudulent activity is costing the UK’s small businesses £18 billion every year, according to new research from Sage Pay.
More than a third of firms were affected in some way by fraudulent transactions in the past 12 months, losing an average of nearly £3,500.
It was also found that many business lacked any sort of official processes for dealing with fraud, as 32% of companies said they spent no money on prevention at all.
This was despite 55% of consumers suggesting that security is a top priority for them when it comes to paying for goods.
The study suggested that the costs of tackling fraud – estimated at around £1,881 annually – is actually half of the cost of it occurring.
All of the findings are compiled in Sage Pay’s 2015 Payment Landscapes Report which studies the payments industry.
It highlights that fraud is a growing issue for businesses and that it is constantly evolving as a problem – making it more difficult to tackle.
The report suggests that the rising use of contactless payments is helping to reduce instances of card skimming and counterfeit cards, although scams and computer attacks are increasing.
From a business point of view, fraud can pose several major issues as it could cause financial loss and potentially drive customers to go elsewhere.
Should consumers have security concerns over a company they are less likely to use or purchase its goods and services and this could have a detrimental effect on sales and finances.
In instances where the brand is adversely affected, sales could decline and a firm could be left facing serious financial consequences.
In the worst cases, a business could be left facing company administration if the cash flow can no longer be managed effectively.
While the initial investment required to tackle fraud may be high, the research suggests that the long term benefits far outweigh the costs.
There are a number of tools available for firms to protect themselves, so it is worth taking some time to study the market before deciding which safeguards, if any, to opt for.
By Phil Smith