Payments Canada: Rate of payment fraud higher among businesses than consumers

Around one in seven (15%) Canadian businesses lost money to payment fraud in the past six months, meaning that businesses experience a higher rate of payment fraud than the country’s consumers, at 20% versus 13% respectively.

The research by Payments Canada revealed that types of fraud were similar for both segments.

Impersonator fraud, which originates from a phone call, message or email that appears to be from a trusted business source (25%), intercepted business e-Transfers (22%) and credit card fraud (2%) are the most common types of fraud affecting companies.

The majority, or 63%, of businesses lost $3,000 or less to payment fraud, Payments Canada reported.

The rate of payment fraud remained largely in line with 2023 (19%), despite 63% of businesses having said they feel confident in knowing how to protect themselves against payment fraud and cybercrime, and 61% who said they are more aware of how to recognize potential threats.

Of those businesses surveyed, 45% have observed an increase in fraudulent, cybercrime or suspicious activity directed at them in emails over the past 12 months, while 39% identified an increase via social media platforms and 34% through retail merchant sites.

However, seven out of 10 Canadian businesses were partially or fully reimbursed if they did lose money as a result of fraudulent activity, with 32% fully reimbursed by their financial institution, versus 39% that were partially reimbursed and 29% which received no compensation.

“Addressing fraud risks is a central focus for the payment ecosystem. It requires a multi-faceted approach that leverages technology, system innovations, evolving regulations and education through continued industry collaboration,” said Donna Kinoshita, chief payments officer at Payments Canada.

“Looking to the future, biometrics, multi-factor authentication, confirmation of payee systems, AI learning for fraud detection, centralized fraud systems, in addition to enhanced reporting and data sharing, are just some of the cross-industry innovations and initiatives that will play a role in helping protect Canadian businesses and consumers.”

Nearly two in three businesses (65%) would be willing to take extra steps to make an online transaction if it meant they were better protected, the research revealed.

“Businesses face the challenge of ever-evolving and increasingly sophisticated payment fraud and cybercrime threats,” added Jon Purther, director of research at Payments Canada.

“Our study reinforces there is no room for complacency around measures to protect against and detect fraud risks for Canadian businesses regardless of size and industry, and that businesses are willing to take extra steps to make an online transaction if it meant they were better protected.”

Further reading: Payments Canada study reveals impact of payment fraud on Canadians