Canadian Businesses Are Increasingly Experiencing Payment Fraud – Payments Canada Insights

Jon Purther, Director of Research at Payments Canada notes that a recent study from Payments Canada has revealed that one in five Canadian businesses experienced payment fraud in the past six months.

Jon Purther of Payments Canada said that this is despite 63% of businesses who report that they feel confident in knowing how to protect themselves against payment fraud and cybercrime and 61% who say they are more aware of how to recognize potential threats.

Jon Purther of Payments Canada further noted that the most common types of fraud experienced by Canadian businesses were “impersonator fraud” which is said to be originating 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 (20%).

Jon Purhter added that when fraud occurred, over a third of businesses (39%) suffered losses greater than $1,000 in a single experience.

As payment fraud and cybersecurity threats become more sophisticated, Jon pointed out that businesses face the challenge of evolving their security practices to keep up.

The Payments Canada research study findings reinforce that there is no room for complacency around cybersecurity measures to protect against as well as detect fraudulent acitivty risks for Canadian businesses regardless of size.

Jon added that nearly two in three businesses (65 per cent) would even be happy to take extra steps to make an online transaction if it meant they were better protected.

The update from Payments Canada also mentioned that when transferring money online, three in five businesses (61%) would be willing to better protect themselves from scams, even if the process called for more time-consuming steps.

Although many organizations are taking measures to keep their payments safe, there is always room for improvement, including better password management.

Overall, 41% of commercial businesses and 39 per cent of small and medium-sized businesses (SMEs) store their passwords on their smartphone, personal computer or laptop.

One in three (33%) of commercial businesses and one in four (25%) of SMEs and tend to use the same password for all their business-related accounts.

The update from Payments Canada added that with nearly half (45%) of businesses reporting an increase in fraudulent or suspicious activity directed at them through email over the last 12 months, companies have also gained a heightened level of awareness.

As we look to the future, continued education for businesses, employees and consumers, working in tandem with evolving technologies and cybersecurity best practices will be critical in combatting the fraud challenges that businesses face.

Stephen Yun, Senior Analyst, Market Insights, Payments Canada, noted in a separate and recent update that Canadians are looking for payment options that make their lives easier, whether digital or non-digital.

Each year, Stephen pointed out that Payments Canada provides an overview of the retail payment trends observed nationally through the release of the Canadian Payment Methods and Trends report.

This year’s report (available October 2024) unveils primary themes around the growth of digital payment options and Canadians’ continued interest in traditional ways to pay.

Stephen added that some of the innovations influencing the purchasing behaviors and preferences of Canadians include real-time payments, generative artificial intelligence (GenAI) and contactless payment technology.

Stephen of Payments Canada further noted that the majority of Canadians (60%) would send real-time payments if the option was available.

He added that the top three payment situations for sending money in real-time include sending money to an individual or business when the payment amount exceeds their daily Interac e-

He also mentioned that transfer amount limit (20%), paying a credit card bill (19%) and paying household expenses such as water, electricity, phone and internet (17%).

He also noted that nearly one in two businesses (49 per cent) intend to use GenAI to make their operations and processes more efficient.

He also shared that the top three GenAI applications perceived to benefit businesses most are cited as fraud detection and prevention (44%), automating payment processing (37 per cent) and creating personalized customer experiences (29%).

As explained in the update from Payments Canada, contactless payment options like wearables (for example, fitness trackers and smartwatches) were used to initiate 44 million payment transactions in 2023, totaling $1.1 billion.

The Payments Canada team added that over one in ten Canadians (13%) use smart home devices and social media to make purchases.

The update also mentioned that Canadians are embracing new payment options, they still want choice and flexibility.

Despite the declining trend in cash usage, over half of Canadians (55 per cent) indicated no desire to go completely cashless.

Cash is still a preferred payment choice because it is widely accepted (38 per cent), fast (37%), you can use your own funds (26 per cent), it’s easier and more convenient than other payment methods (21 per cent) and it’s easier to control and keep track of (21%).

Finally, 63 per cent of Canadians would still use cash if a digital Canadian dollar was introduced. Although the use of digital payments among Canadians continues to grow, the end of cash is still far off.

Canadian consumers and businesses have made it clear that when it comes to payments, convenience, efficiency, security, privacy and low costs are vital to them.

The Payments Canada team added that they continue to see an increased demand for more digital payment options and frictionless payment experiences that address these needs.

But the update also mentioned that Canadians want continued access to tried and true payment options due to their ease of use and dependability.

According to the update, gaining an understanding Canadians’ unique payment attitudes and behaviors is critical to ensure we create a financial future that benefits all Canadians.



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