How to fight payment fraud in b2b transactions

payment fraud

Last modified on March 26th, 2024

With all the reports about JP Morgan acquiring a startup for $175 million based on a roster of over 4 million fake customers and transactions, payment fraud is on everybody’s mind right now. But if criminals can defraud the huge JP Morgan, payment fraud thieves could get anyone. With increasing stories of cybercrime emerging, businesses are right to be worried about the threat of payment fraud. But when you know the right strategies for detection and prevention, the worries tend to disappear. Learn more about the state of play for payment fraud, as well as its most common types. Discover how to protect yourself against b2b payment fraud and safeguard your business against fraud losses.

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Payment fraud in b2b transactions: the state of play

So, there’s good news and then there’s bad news.

Let’s get the bad news out of the way first. All the 2022 reports say the same thing: payment fraud in B2B transactions is still on the rise.

For b2b payments in particular, the pressure is rising on firms to create a watertight, impenetrable barrier against fraudsters. Popular new payment methods such as Buy Now, Pay Later (BNPL) mean that accompanying scams (such as account takeover) have also exploded, although these are less prominent in B2B transactions.

What is more relevant for the b2b landscape, though, is the reliance on third-party marketplaces such as department stores or reseller sites. These often become key partners for large enterprises but don’t always integrate with your own security measures, meaning vendor weaknesses expose you.

However, there is a silver lining.

The good news is that businesses are fighting back. For example, 82% of senior leaders consider fraud prevention a top priority for 2023. At the same time, many of these companies are relying on outdated techniques to fight fraud. For example, 70% rely on human callback in order to change the details of supplier accounts – a method that is more vulnerable compared to automated bank account number validation.

However, we have reached a point where companies value protecting financial information more than minimizing costs. The number one spending priority for enterprise-level companies is now reducing payment fraud.

It’s clear that organizations are now really clear on the impacts of possible fraudulent activity being associated with their business. In fact, those who already use automated fraud-prevention platforms have the ability to scale faster, accepting a higher number of customers than those who don’t.

Types of payment fraud in B2B transactions

Payments are one of the fastest-growing technologies globally. Every payment method has its own classic scams, with nuances depending on how the payment fraud is carried out.

Vendor fraud

Vendor fraud (or invoice fraud) is one of the most established methods of payment fraud. It was discovered at Google in 2017 after their vendor, John Deere submitted unauthorized invoices for work never performed. The supplier tried to get both Google and Facebook to transfer over $100 million dollars to their bank account.


Credit card fraud

Credit card fraud is also a common scam in b2b payments. The huge US corporation, Target became a victim of fraud due to a huge data breach in 2013. Scammers were able to steal the credit card information of over 40 million unsuspecting customers and used it to scam other businesses. The stolen details were used through identity theft (also known as third-party fraud) to extend lines of credit elsewhere.


Wire Transfer Fraud

Wire transfer fraud refers to a type of direct bank-to-bank transfer. Since wire transfers typically deal with high amounts of money (between tens of thousands and millions), the process requires security verification. However, if fraudsters can trick you into divulging this information by impersonating your bank, it could cost your business.

Impacts of payment fraud

Unfortunately, the effects of each type of payment fraud are largely the same.

First, companies suffer financial losses, sometimes up to the millions. Then, the fraud investigations (internal or external) tend to find the negligent parties, which can delay operations.

Finally, the reputational damage caused by b2b payment fraud can lead to a further loss of business, as the leaking of personal information can make your business untrustworthy. It highlights the very real effect of payment fraud that goes beyond the money – fraud incidents have generated issues with suppliers in 39% of cases and with investors in 10%.

How to prevent payment fraud in B2B transactions

If preventing payment fraud was easy, everyone would be doing it. That being said, automation using specific platforms such as Trustpair is a proven solution, working 100% of the time. The issue lies in the fact that many companies are still stuck in the past: they don’t believe in investing in new tools and remain confident in being able to handle threats manually and on their own.

Instead, we’re sharing three specific measures you can implement to stop fraudsters from taking advantage of your business.


Employee training and education

Research shows that awareness campaigns are some of the most effective measures in combating fraud. But how should you deliver employee education to fight cybercrime?

Well, in this case, more is more.

Regular training sessions enable your people to stay updated on the latest payment fraud trends and find out about emerging techniques, early. Once every couple of months is best.

What’s more, a ‘little and often’ approach to fraud education means that it’s fresh in the minds of your employees. So they’re more likely to flag suspicious behavior, resulting in a big win for the business in reporting fraud.

At the same time, training isn’t enough if it’s the only measure you have, as Trustpair CEO Baptiste Collot noted. He said, “Training isn’t self-sufficient. It needs to be associated with the right tools and technology. Education and tools are complementary, they’re both lines of defense, stronger together than alone”.


Strong security measures

Strong security measures refer to the likes of a powerful anti-malware filter and internal controls. Your standard email filter just isn’t enough – spam makes up approximately 45% of all emails. But these measures should prevent the threat of payment fraud, whether it’s delivered through email or by a hacker in your payment system.

For example, a machine manufacturing company had very poor transparency over its financial transactions due to weak internal controls. They noted a failure to prepare invoices for sales and check invoice prices. Once corrected, the company balance sheet improved as payments were properly checked. Both unintentional human error and intentional counterfeit cases were prevented.

Advanced analytics and machine learning

Advanced security analytics is a set of mathematical algorithms and statistical models. They help companies to track fraud detection in online payments and understand forensic data, predicting sketchy behavior.

Machine learning enables businesses to detect threats early, due to reporting in real-time. Moreover, the complex visualization and pattern recognition technology allows anti-fraud officers to spot suspicious behaviors more easily.

These techniques are particularly effective in fighting against advanced persistent threats (APT). This is because they can protect your entire payment ecosystem, including each third-party merchant, against payment fraud.

For example, Trustpair’s machine learning technology automates the account validations directly in your system, while integrating with third-party programs at the same time. One advantage of this tech is that it ensures the payment beneficiary is actually who they say they are. This increases confidence in payments and prevents fraudulent activity throughout the payment chain. Contact our fraud experts to learn more!

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Automation solutions

The most effective way to fight fraud is automation. Industry trends have highlighted that the way most fraud attempts originate is from changes in supplier credentials – but many overlook these changes without verifying them. It leaves a huge information gap that fraudsters can expose without much risk.

However, automation platforms allow finance teams to check and authenticate these changes. In a world where this is impossible to do manually, it’s clear that automation platforms should be the number one choice in fighting b2b payment fraud.

How to detect payment fraud in b2b transactions

Alongside prevention, payment fraud detection is key to maintaining the financial health of your business. You can detect b2b payment fraud through:

  • Real-time monitoring and alerts
  • Transaction analysis and investigations

Real-time monitoring and alerts

These days, some businesses have access to real-time payments. This means that there’s no delay between you sending the funds and your supplier receiving them. Despite the numerous benefits of real-time payments, they don’t leave much room for second-guessing.

But in fraud detection, timing is everything. That’s why having access to real-time data and automated alerts is so important. Even with large data sets or international information, real-time monitoring allows your firm to detect fraud instantly.

What’s more, pairing the data with automated notifications will flag suspicious transactions and allow you to stop payments from going through.

Transaction analysis and investigations

Fraud analytics, as defined by Gartner over a decade ago, should be performed in five focus areas:

  • Endpoint-centric: investigating customers and suppliers at their devices and locations
  • Navigation centric: payments fraud detection through finding anomalies in patterns of behaviour
  • Account centric: analyzing the bank or account itself for indications of a breach
  • Cross channel: comparing typical vendor behaviour against specific situations
  • Entity linking: identify relationships between different parts of the supply chain to find weaknesses or uncover cyber attacks

In payment fraud detection, machine learning can help you cover more ground in transaction analysis without increasing the workload. With a thorough understanding of your own payments matrix, your finance team will find it easier to identify compromised accounts.

For example, Trustpair sends live warnings on the platform or via email in case of any fraud attempt.

Best practices for fighting payment fraud in b2b transactions

Just like best practices reduce risks in the construction industry, they can be applied in the same way for fraud prevention.

Establish robust policies and procedures

The effects of implementing the right procedures can be a game changer. For example, you could create a policy to require 2 payment approvers at a managerial level if the payment is over $10,000. This would reduce the chance of internal payment fraud and ensure that the invoice is seen by two sets of eyes before it can be approved.

Not only that, but robust policies fight against fraud by design. When everyone complies with procedures exactly, your entire team has confidence in your anti-fraud measures. Communicating regularly and actively about these policies and procedures is therefore key in preventing b2b payment fraud.

Collaborate with partners and vendors

Third parties can be a real weakness in your security measures against fraud – since every company approaches anti-fraud in a different way. But you can use APIs or native connectors to integrate your anti-fraud platform with partners.

This means you can secure the entire supply chain against payment fraud and experience better efficiency as you move between systems. Less time wasted flicking between programs, and fewer frustrations for your team. For example, Trustpair offers flexible integrations with most software companies. It means that you can integrate your fight against fraud into all your existing processes and systems.

Regularly review and update security measures

Regular security reviews allow you to spot new threats and adjust your anti-fraud measures accordingly. No need to replace your office chip cards with these new microchip injections, but it is worth testing out different approaches.

For example, as part of Trustpair’s market-leading approach to maintaining corporate security, we screen vendor details and continue to monitor them on a 24/7 basis. This means that your finance department can work with clean data, verify the account number of each vendor, learn about ‘normal’ behavior and spot risks easily. Even with new types of fraud!

With this information at hand, our program automatically flags anomalies to prevent payments from going through when risks are heightened.

Demo Trustpair to protect your company from payment fraud.

In summary:

  • Payments fraud can occur in debit transactions, credit cards, vendor invoices and other online fraud channels like phishing emails.
  • Your finance department can differentiate between legitimate payments and criminals taking advantage by using fraud detection methods like vendor authentication, spotting attempted breaches, and getting a ‘fraud alert’ from software
  • Fraud protection includes the classic ways to prevent fraud like preserving customer personal data (social security number, credit card numbers, account information etc)
  • Protect yourself and merchants against any fraud perpetrator by committing to an anti-fraud platform like Trustpair for the automatic account validation of your vendors


Phishing scams, bank fraud (through stolen account details) and ‘card not present’ fraud (also known as identity fraud) are all common b2b scams. Submitting false invoices is also a form of fraud found in b2b situations.

When people act for fraudulent purposes, you can prevent success by using payment systems with built-in protection to verify details. To avoid becoming a fraud victim, get automated fraud alerts when vendor details don’t match the recorded bank account information.

Identify possible fraudulent transactions by flagging suspicious transactions and blocking payments from card transactions that seem too good to be true. Also detect payment fraud by following the right policies and procedures, or thoroughly investigating transactions.

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