How Accessible AI Tools are Changing the B2B Payments Fraud Landscape

In a recent episode of Strategic Treasurer’s Treasury Update Podcast with Craig Jeffery, Ernest Rolfson, the CEO of Finexio, delved deep into the challenges and opportunities facing the B2B payments industry, around new technology resulting in an increased risk of fraud. With the rise of technology, the landscape of business payments is undergoing a significant transformation. Here are some key takeaways from the discussion:

The Risks in the B2B Payments Landscape

The B2B payments landscape is fraught with challenges, especially in the digital age. As businesses transition to online platforms, they become vulnerable to various risks. Ernest Rolfson, CEO of Finexio, emphasized the potential financial losses that businesses could incur if they don't adopt secure payment processes. He stated, "Risk number one is significant financial loss. You've got serious reputational risk and harm...The bad guys know this and are targeting the highest volume." Reputational harm can be devastating, especially if critical supply chain vendors are affected. The "bad guys" are well aware of the vulnerabilities in the system and target high-volume transactions, making it imperative for businesses to be proactive in safeguarding their payment processes.

The Role of Technology in Improving Efficiency and Enhancing Security

In today's digital era, technology plays a pivotal role in enhancing security. Finexio has been leveraging AI tools like ChatGPT to improve the business. "We've been using ChatGPT at the company... We're using it to generate content as it relates to educating our partners and customers in the broader marketplace." Finexio is also leveraging AI tools in other ways including protecting against fraud. Rolfson added, “We're using other hardcore commercial tools around AI”. “It's [about] really having a multi-factor, multi-form approach for combating [fraud]”.

AI's Double-Edged Sword: Aiding Fraudulent Actors

While AI has been a boon for many industries, including B2Bpayments, it's essential to recognize its darker side. AI's capabilities are not just limited to legitimate businesses; fraudulent actors are also harnessing its power for nefarious purposes. Ernest notes, “the thing that we're paying attention to are ways that businesses looking to deliver payment could be fooled into sending payment information to the wrong place, which is often around a criminal pretending to be someone they're not… …that involves using technology to impersonate, payees or suppliers in the business payment world”. AI is being used to create "deepfakes", which can be fake audio, and even video that is very convincing, making it harder and harder to verify the authenticity of a request to change or update payment information from a supplier.

The Complexities of Vendor Onboarding

Vendor onboarding is a critical aspect of the B2B payments process. A robust vendor onboarding system ensures that businesses are dealing with legitimate entities, reducing the chances of fraud. Ernest highlighted the lack of a formal KYC (Know Your Customer) process in many businesses, emphasizing the need for due diligence in the B2B payments process. "Having a really good formal vendor onboarding sort of KYC type process. We don't even see that existing most of the time with a lot of businesses." Ernest goes on to mention identity verification and bank account validation and verification. “Typically, there's a variety of tools that you need to use for that because there are different types of businesses or entities and accounts that need to be verified.”

How to Protect Your Payments

Ernest shared that one of the best ways to protect your payments is to “leverage payment methods that are extremely secure”. Virtual cards, as highlighted by Ernest, are emerging as the most secure payment method. He elaborated, “With virtual cards, right, you've got limits on the dollars of spend... You've got no exposure to banking and routing information." Since virtual cards come with spending limits, randomly generated numbers that can't be reused, and no exposure to banking and routing information they are significantly more secure than other payment methods such as paper check or even ACH payments. The future certainly suggests the emphasis is on leveraging technology to ensure that businesses can conduct transactions safely and efficiently.

In conclusion, the B2B payments industry is at a pivotal juncture. With the rise of technology and the associated risks, businesses need to be proactive in safeguarding their payment processes. As Ernest Rolfson aptly put it, "payments can be profitable and efficient and not scary." It's time for businesses to embrace the future and leverage technology to its fullest potential.

To learn more about Finexio, click here to reach out to one of our payments experts and discover how your business could benefit from the fraud prevention capabilities of AP Payments as a Service.

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