According to a study released today by Sage Pay, more than 40 per cent of SMEs have experienced fraud in the past 12 months, with an average cost per business of 4,515.
Despite this, more than one third (39 per cent) of businesses dont spend any money on fraud prevention, while 21 per cent dont know what fraud prevention tools they use. 42% of companies dont know if they comply with the Payment Card Industry Data Security Standard.
According to Sage Pay CEO Simon Black, there is such thing as a healthy level of fraud.
He said: This study shows that fraud levels are spiralling out of control and more must be done to reduce the amount of money lost each year. But companies need to be pragmatic eradicating fraud completely could be damaging for a business.
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, theyre likely to be turning away genuine customers who have simply entered their details incorrectly.
Although it can be tempting to tighten security controls in the face of fraud, it is worth keeping in mind that for every extra action a consumer is asked to make, you are prolonging the customer journey and therefore increasing the risk that the customer will drop out of the buying process.