Why the financial ecosystem is critical to creating more secure SMBs
Today, small and medium-sized businesses (SMBs) cannot take on fraud alone. SMBs typically lack the advanced technology and expertise needed to counteract the increasingly sophisticated tactics used by fraudsters. Threats, such as phishing and first-party misuse, are also becoming more prevalent.¹
Due to financial and human resource constraints, SMBs struggle to invest in the sophisticated fraud prevention systems necessary for effective security. Fighting fraud effectively also requires analysing vast amounts of transaction data and utilising analytics tools. However, gaps in fraud tools are the top fraud management challenge faced by the region’s businesses, followed by the lack of data availability and access.²
In the face of these obstacles, the financial ecosystem is working constantly to stay ahead of fraud, ensuring SMBs do not have to manage security on their own. Beyond robust security from financial institutions and networks, fintechs and digital platforms provide targeted, segment-specific support, such as for e-commerce. Together, these players create a much safer environment for SMBs to operate in.
Payment networks accelerate fraud prevention
Payment systems are vital components of the financial landscape, offering advanced fraud prevention mechanisms that safeguard SMB transactions. A pivotal element in these tools is tokenisation, which safeguards sensitive credit card information by converting it into unique codes unusable outside of the original transaction context. This is accomplished by replacing confidential data with tokens that are devoid of intrinsic value. These specific tokens are designated for use solely with the merchants engaged by the consumers. For SMBs, tokenisation significantly diminishes instances of fraud and boosts the rate of successful payment authentications, which in turn fosters a base of more satisfied and secure customers.
Payment networks ensure these safeguards, like Visa Token Service, are seamlessly integrated into SMB transactions, providing higher security and peace of mind.³ By integrating tokenisation into their systems, payment networks help SMBs reduce their vulnerability to data breaches and fraudulent transactions. Additionally, these networks offer tools designed to detect and prevent fraud as they occur, further enhancing the security of SMB transactions.
Financial institutions bolster protection with established security infrastructure
Financial institutions, particularly issuers, are also vital for adding layers of security that protect SMBs. Issuers have the resources and capabilities to build comprehensive, AI-powered fraud risk management tools into their networks. These tools provide real-time risk assessment, evaluating the legitimacy of transactions and preventing unauthorised payments. An example of this is Visa Advanced Authorisation, which uses predictive analytics to assess transaction risk, allowing issuers to detect and respond to potential fraud in real time.⁴
Issuers also use insights that allow them to manage rules rapidly, declining high-risk purchases and flagging suspicious transactions for further investigation. For instance, Visa Risk Manager enables issuers to set customised risk parameters and receive alerts about potentially fraudulent activities.⁵ These capabilities ensure that SMBs benefit from the same level of security that larger enterprises experience, without needing to invest heavily in their own infrastructure.
Furthermore, financial institutions often offer additional services, such as account monitoring, which provide SMBs with continuous surveillance against potential threats. By leveraging these established security infrastructures, SMBs can significantly enhance their defence mechanisms without the associated high costs.
With the support of the financial ecosystem, SMBs are not alone in their journey. Payment networks, financial institutions, fintechs, and digital platforms are essential in providing SMBs with advanced security measures, enabling them to adapt to emerging threats. SMBs can confidently tackle future challenges with scalable and adaptable security, enhancing their security posture and ensuring transaction safety. This collaborative effort transforms the financial ecosystem into a fortress, offering SMBs the protection they need to future-proof their business.
¹ Visa, Enhancing Small and Medium-Sized Business (SMB) Financial Security and Fraud Prevention, 2024
² Visa, Enhancing Small and Medium-Sized Business (SMB) Financial Security and Fraud Prevention, 2024
³ Visa, Visa Token Service, accessed May 2024.
⁴ Visa, Visa Advanced Authorisation and Visa Risk Manager, accessed May 2024.
⁵ Visa, Visa Advanced Authorisation and Visa Risk Manager, accessed May 2024.