- While digital payment systems grow in popularity, checks remain an important payment tool
- Digital payment fraud schemes get lots of press, in spite of the fact that check fraud is rising
- Fraudsters are able to use new digital tools to inexpensively create conterfeit checks
Industry Analysts, Inc. reminds us that, in spite of the growth and popularity of digital payment systems, checks are still a force to be reckoned with:
Let’s paint a picture: In today’s digital age, where contactless payments seem to be taking over, the paper check just won’t go away. Despite what you might hear, it’s still the method of choice for payments among businesses, with a staggering 95% of business leaders tethered to it. It’s this very reliance that has opened up a can of worms in terms of fraud risks.
Indeed, the article goes on to acknowledge that digital contactless payments get plenty of attention and press warnings of possible digital breaches -- overshadowing a real and pervasive threat that continues to grow:
But here’s the kicker: while most execs are sweating over digital breaches, a significant risk is being swept under the rug — check fraud. It’s alarming to think that this blind spot can cost businesses up to 1.5% of their revenue, not to mention the hit their reputation could take.
In fact, according to the article, business check fraud is the number one form of payment fraud and affects 74% of organizations.
Check Fraud Threats: Insiders and Digital Tools
The article also spotlights some difficult-to-digest realities:
It’s not just some shady character lurking in the shadows; it’s potentially right there in the heart of your business. Yes, it’s a tough pill to swallow, but internal controls (or the lack thereof) can be your undoing. When employees with the keys to the financial kingdom go rogue, the results can be catastrophic.
As noted many times previously in the blog, it's also getting easier and easier for fraudsters to utilize new, inexpensive, highly accessible digital tools to create fake "old-school" checks. As it happens, Industry Analysts, Inc serves the office equipment market, and recommends that office equipment resellers help clients strengthen defenses through secure check stock, printers, and toner to reduce fraud risks.
There’s a misconception floating around that the rise of digital banking and payments is sounding the death knell for check fraud. But let’s not kid ourselves — that’s far from the truth. Fraudsters are craftier than ever, manipulating checks in ways that blend old-school forgery with new-age digital loopholes.
Businesses Reliant on Resellers and Financial Institutions
Despite the rise of digital payments, check fraud remains a significant threat to businesses, costing around 1.5% of revenue on average. Internal controls and employees are a major vulnerability, with fraud sometimes originating from within companies, and fraudsters regularly adapting their tactics to blend physical and digital methods.
In other words, businesses are not equipped to handle the challenge of check fraud alone. That's why businesses rely on their resellers and financial institutions to assist in the fight against check fraud.
Resellers and financial institutions can provide the right blend of technology to stop check fraud, delivering solutions like Anywhere Fraud with Image Forensic AI as part of their check fraud detection package. This enables businesses to ensure that any stolen check will need to pass rigorous tests -- both transactional and image-based -- before funds are released.