The role of Accountants & bookkeepers in derisking transactions is crucial for SMEs in the current context.  

Fraud is one of the biggest risks businesses face and this is on the rise. It is becoming more cyber-enabled, giving fraudsters more opportunities to infiltrate companies through different methods. Small businesses aren’t getting the help and support that the wider consumer public gets. This is why this is one of our major areas of development at Libeo. 

What are the different types of payments fraud?

There are two main types of payment fraud, which can broadly be categorised as those that produce a direct victim and those that produce an indirect victim. For instance, payment frauds that fall into the former camp include things such as identity fraud and hacking, and attacks are commonly made via things such as supplier fraud, invoice fraud, and company director fraud.

Indirect fraud tends to focus more and more on”faceless” crimes, with the victims being banks, states or systems. Money laundering is the most common form of this kind of payment fraud. There is sometimes a combination of these two types of fraud, with AC Scams prompting victims to be misled about how their accounts will be used to cypher money from them.

Who is most likely to be targeted by payments fraud?

Businesses are a common target for payment fraud, with smaller businesses a particularly popular target for criminals. Financial institutions can also be targeted in so-called “multi-vector attacks” that target a range of financial actions. 

Which stage of the payment process carries the most risk?

The attacks will often target processes like the onboarding of new customers, request-to-pay, invoicing, and initiation or execution of the payment. If you think about it, there are commonly three steps customers will go through when making any kind of payment:

• Validation of the source when requesting the payment
• Validation of the payment requisition
• Validation of the transaction
  

Each of these steps in the process has vulnerabilities that criminals can exploit, although the greatest risk comes in the second and third steps of the payment process. For instance, fraud conducted at the invoicing stage often results in a so-called Authorised Push Payment (APP), as fraudulent invoicing can prompt the payer to initiate payments in good faith to criminals.

How does Libeo help reduce payment fraud?

Firstly, we give our customers the choice of payment method, either Open Banking or a Libeo Wallet. We feel it’s important to offer a choice so customers can choose the right method for them. 

We use artificial intelligence to flag erroneous transactions. These transactions are either just flagged or blocked if the activity looks suspicious. All payments are run through a fraud analysis based on multiple criteria to detect risky/unusual activity, such as IP addresses (different country or IP address compared to usual), the volume of payments, previous activity and destination. 

Every day, our Customer Success Managers check high-risk of fraud transactions to ensure the validity of the payment. If the risk is identified as high, payment is blocked and the Customer Success Manager will make a call to check.

Modifying and validating the bank details can only be done by authorised people and these are then flagged if changed, meaning you have control over who can amend the most important of details.

User roles control who can see and do certain things. For example, we work with many accounting firms that don’t want to make the physical payment but do prepare the pay run for clients to log into Libeo and approve themselves.

The future of payment technology and Accountants & Bookkeepers

With the increased demand for businesses to outsource their full accounting, we’ll only see more demand for pay-run support from accountants and bookkeepers, whether that be payroll or supplier payments. Having a solution in your corner that allows a secure and simple way to process payments or prepare payments for client approval gives you a great opportunity to deliver a new service but also one that adds real value to your clients.