90 per cent of businesses are at risk of fraud due to unsatisfactory payment systems

Jim Conning, of Bottomline Technologies, says only 10 to 20 per cent of firms are verifying debit and credit transactions

About 90 per cent of businesses are at risk of fraud because of unsatisfactory payment systems, according to payments director at Bottomline Technologies, Jim Conning.

Conning claimed that nearly all firms have some form of validation process for direct debit and credit transactions, however he said that firms are at risk of fraud, reputational damage and ultimately customer loss, depending on where in the chain the validation process takes place.

"About 50 per cent of companies are validating at the point of entry, but the other 50 per cent aren't, and those are at risk," he said.

The validation process is a piece of software that ensures that the sort code and account numbers exist and match one another.

And while the number of companies that are validating the details at an early stage is quite high, the number of firms that are verifying the details is much lower.

Conning explained that the verification process involved checking that the sort code and account number were matched to an existing individual at the point of data capture. He claimed that only 10 to 20 per cent of businesses verified the data, and that most of these were large organisations.

"The other 90 per cent of organisations are at risk of fraud," he said.

Conning was speaking on the back of independent research conducted by Redshift Research on behalf of Bottomline Technologies.

The survey, which sampled the views of 200 UK financial decision makers and over 1,000 people from other professions, found that 95 per cent of failed direct debit or credit transactions are due to human error, with 71 per cent of finance departments citing errors with the bank account number or sort code as the most common reason for the transaction to fail.

About 71 per cent of businesses recognised that failed transactions could damage customer and/or employee relations, and the failures don't just cost firms reputational damage; 60 per cent of the businesses have to spend a lot of time having to rectify the issues - 43 per cent spend more than four hours a month, and 11 per cent spend more than 10 hours a month fixing the issues.