Fear of Fraud Slows B2B Business Growth

A recent proliferation of fraud in the business-to-business (B2B) space has resulted in tangible negative outcomes for many companies, hindering their B2B business development. 

In fact, 54% of retailers and 44% of manufacturers fail to accept new customers due to fraud concerns, according to “Risk and Resilience,” a PYMNTS and TreviPay collaboration based on a survey of 150 executives at companies with $10 million to $1 billion in annual revenue in three sectors: retailers, manufacturers and marketplaces. 

Get the report: Risk and Resilience 

Nearly half (47%) of businesses surveyed were unable to onboard clients due to a fear of fraud and a belief that their existing anti-fraud measures would be insufficient. Other businesses fail to grow because their anti-fraud approaches flag legitimate business contacts or transactions as fraudulent, thereby preventing them from doing business. 

Supporting Safety and Security in Payments 

“As B2B companies continue to expand their online offerings in 2022, supporting safety and security in payments remains a key priority in payments innovation,” TreviPay CEO Brandon Spear wrote in a recent PYMNTS eBook. 

Read more: Mitigating Digital Fraud Risk to Drive B2B Business Growth 

Organizations that are using manual and reactive anti-fraud methods experience greater negative impacts on their growth due to fraud than those that are using proactive and automated solutions. Those that wait until evidence of fraud emerge or use manual solutions may naturally see greater revenue loss due to human error or slow and inefficient identity verification or vetting procedures. 

In addition, 54% of organizations implementing manual and reactive anti-fraud solutions fail to accept new customers due to fraud concerns, compared to 31% of those using automated and proactive technology. 

PYMNTS’ research finds that companies with the highest levels of fraud loss are also slow to onboard new customers and clients, compared to organizations with lower levels of fraud-related revenue loss. At least 30% of organizations that have lost more than 5% of their annual revenues to fraud take approximately one month or more to onboard new businesses. 

This could reflect PYMNTS’ finding that businesses that use proactive, automated anti-fraud solutions tend to see fewer fraud impacts, as automated anti-fraud technology tends to increase onboarding efficiency and speed. 

Implementing Better Tools 

Although fraud concerns and their impacts significantly hamper growth for many retailers and marketplaces, this does not indicate that organizations remain passive when confronting security challenges. 

Businesses use an array of methods ranging from traditional approaches, such as card verification, to proactive methods that automate digital identity and transaction review to authenticate potential business partners’ identities. 

In addition, 71% of retailers, manufacturers and marketplaces plan to implement better tools to detect fraud and improve safeguards against false flags and solutions that make onboarding and data management less problematic. 

Proving and authenticating a business’s digital identity is and will continue to be among the biggest challenges for organizations as well as an important driver of business growth.