Visa’s latest research has revealed the alarming extent of fraud affecting small and medium businesses (SMBs) in the UK. According to the study, 41% of SMBs have fallen victim to fraud in the past year, resulting in an average financial loss of £3,808 per business. With SMBs making up 99.9% of the UK’s 5.6 million businesses, the impact of fraud extends beyond individual companies and poses a significant risk to the UK economy.
The survey identified billing and invoice fraud (26%), phishing scams (24%), and bank account hacks (23%) as the most common types of fraud faced by businesses. However, the consequences of fraud go beyond financial losses, affecting decision-makers’ confidence, trust in third parties, and even personal well-being. Nearly one-third (29%) of SMB leaders reported a negative impact on their confidence, while 20% admitted it had affected their mental health.
Fraud also presents challenges for SMB growth, as consumer confidence in transaction security is a critical factor in driving online purchases. While price remains the top consideration (62%), transaction security (48%) ranks ahead of ease of returns (29%) and customer reviews (27%). This highlights the importance of implementing robust fraud prevention strategies to maintain customer trust and drive business growth.
Visa’s report also sheds light on the broader economic impact of fraud. Data shows that after experiencing fraud, consumer spending patterns change significantly, with 91.2% spending less and 6.4% halting purchases entirely. On average, consumer spend decreases by 46.2% in the six months following a fraud incident.
In response, Visa has launched a digital toolkit to empower SMBs with knowledge and practical solutions to combat fraud. Mandy Lamb, managing director of Visa UK & Ireland, stated, “Small businesses should not be held back by fraud. We are committed to supporting them by investing heavily in technology to safeguard their operations and level the playing field between small and big businesses in the online marketplace. This toolkit is part of our efforts to help SMBs safely manage their business and serve their customers in a digital world. Customers can feel confident that when shopping at businesses of any size, paying securely with Visa can protect them against fraud. And in case of any issues, Visa is there to help customers get their money back.”
Visa’s ongoing investment in fraud prevention has exceeded £8 billion globally over the last five years, leading to innovations such as AI-driven RTP Protect technology. These efforts have contributed to Visa’s network having one of the lowest fraud rates among payment methods, with £30 billion in global fraud prevented last year.
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In conclusion, Visa’s research has uncovered the alarming scale of fraud impacting SMBs in the UK. With a significant number of businesses falling victim to fraud and facing financial losses, it is crucial to implement robust fraud prevention strategies to protect both businesses and consumers. Visa’s digital toolkit aims to empower SMBs with knowledge and practical solutions to combat fraud, and their ongoing investment in fraud prevention technology demonstrates their commitment to supporting small businesses. As a result, customers can feel confident in the security of their transactions when using Visa, and in case of any issues, Visa is there to help. Stay updated with the latest FinTech news and developments to stay ahead in the industry.