Why Cross-Border Sales and Payments Are a Double-Edged Sword

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Any SME looking to grow beyond a regional or national footprint can look to international sales. Selling across borders means reaching a larger audience capable of significantly boosting revenues and profits. But with cross-border sales come cross-border payments. The two are a double-edged sword for financial institutions.

From the payment perspective, a greater demand for reliable international payment systems is being forced by globalization. Moreover, the demand has only increased since the start of the COVID pandemic. Between global remote work and online shopping, reliable payment systems are no longer an option. They are a necessity.

At the same time, there is growing concern among financial institutions, payment processors, and companies that trade internationally about the potential for fraud. Roughly 40% of SME’s participating in a Mastercard survey reported avoiding making or receiving online cross-border payments due to the risk of potential fraud. SME’s also reported speed and transparency as additional concerns.

Two Ways Fraud Is Perpetrated Across Borders

Digital technologies have only increased the options for sending payments across borders. Every cross-border payment system is at risk of fraud, requiring both senders and recipients to remain vigilant against threats. Two of the most common targets for fraud are:

1. Credit Card Payments

Credit cards remain a hot target among fraudsters who prefer to leverage card-not-present (CNP) schemes. Fortunately, efforts to thwart them have proved successful in recent years. In 2022, roughly 45.6 million CNP records were posted on the dark web. That represents a 24% decrease from the year before. Likewise, CP payment records were off by 62% at just 13.8 million.

The steep reductions are credited mainly to Russia’s crackdown on cybercrime as well as some of the fallout of the war in Ukraine. But rest assured that fraudsters will continue going after cross-border payments by targeting credit cards.

2. Wire Transfers

Wire transfers are another easy target for fraudsters who know how to intercept sensitive information. Data suggests that upwards of one-third of all real estate wire transfers in 2020 were targets of potential fraud. Not all the attacks were successful. Nonetheless, so many being targeted demonstrates the potential of utilizing wire transfer attacks against cross-border payments.

Blacklisting Isn’t the Answer

One way to secure cross-border payments is to blacklist entire countries or regions. Refusing to accept payments from areas with a high tendency toward payment fraud greatly reduces an organization’s risks. But blacklisting isn’t the answer in a world that depends on global opportunities. It only leads to friction between financial institutions and their customers.

A better option is to deploy a proven fraud protection platform by way of a trusted partner like Outseer. Outseer.com offers tools and strategies designed to look for fraud before it occurs while also minimizing the damage of anything that gets through. Their Global Data Network and Risk Engine products are well-known tools in the fight against fraud.

The right platform, combined with ongoing research, expert advice, and unwavering vigilance can mitigate the risk associated with cross-border payments. Financial institutions and payment processors owe it to their clients to provide the technology and services they need to protect themselves without blacklisting. It is not likely that companies with a global vision are going to scale back due to the threat of payment fraud. Rather, they will look for cybersecurity partners capable of protecting their payments regardless of where they come from.

The Reality of Going Global

The world is smaller than ever thanks to digital technologies. Companies that would never have previously thought of global growth now openly embrace it. Yet global sales and payments are a double-edged sword. Going global can increase revenues, but it can also open the door to more fraud.

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