Two in five UK SMBs have lost money to fraudsters. Average amount lost due to fraudsters in the last year is almost £4,000, Visa research finds.

Bank account hacks, invoice fraud and phishing scams cited as the most common types of fraud impacting SMBs

New research from Visa, a world leader in digital payments, reveals that more than two fifths (41%) of small-medium businesses in the UK have been a victim of fraud, with the average amount lost due to fraudsters in the last year being £3,808.

With small-medium businesses (SMBs) making up 99.9% of the business population (5.6 million businesses)[1],Visa’s research highlights the potentially devastating financial impact of fraud on businesses and the UK economy.

Of those UK SMBs who have experienced fraud, Visa’s survey found that:

. Bank account hacks (23%), billing and invoice fraud (26%) and phishing scams (24%) were the most common types reported

. More than a quarter of SMB decision-makers (28%) who have experienced fraud report feeling less trusting of third parties as a result, whilst over a fifth (22%) say it impacted their personal finances

. The research also shows that fraud’s impact isn’t just financial, with almost three in ten (29%) saying it knocked their confidence as a decision maker. One in five (20%) say that it impacted their mental health and a similar proportion (20%) say that it has made them second guess business decisions that they make

. After price of goods and services (62%), transaction security (48%) was cited as the most important factor for shoppers when deciding whether to make a purchase of goods or services online, following the ease of returns and refunds (29%) and customer reviews (27%)

The survey also found that fraud can have a detrimental impact on SMBs’ ability to grow their business with consumers placing a high premium on security:

Further data from Visa highlights the impact of fraud on UK consumer spending and the economy. In the following six months after reporting fraud, there is a notable impact on the affected cardholder’s spending:

. 91.2% of consumers spent less

. 6.4% didn’t make any purchases

. On average, consumer spend drops by 46.2% after a fraud event

With a track record in globally upskilling SMBs, Visa has gone one step further with the launch of a digital toolkit. The toolkit is designed to help SMBs understand the different types of fraud that threaten small businesses, with practical tips to help keep their business and customers secure.

Mandy Lamb – Managing Director Visa U.K. & Ireland says:

“Small businesses should not be held back by fraud. We already invest heavily in technology to safeguard small businesses – in effect levelling the playing field between small and big businesses as they trade online.

This toolkit is part of our commitment to support them to safely manage their business and serve their customers in a digital world.

Customers should feel safe in the knowledge that when shopping at businesses big or small, paying securely with Visa can help protect them against fraudsters. If things go wrong, Visa is there to help put things right and work with customers to get their money back.”

Visa has been at the forefront of fraud prevention for decades, investing £8 billion globally including to reduce fraud and enhance network security over the last five years. Last year, Visa proactively prevented an estimated £30 billion in global fraud, contributing to the network’s fraud rates being among the lowest rates of any payment method. To further support the UK in the fight against fraud Visa is introducing a range of innovative technologies and using Visa’s AI-driven RTP Protect technology to fight fraud on account to account payments.

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The research was conducted by Morning Consult, on behalf of Visa, between 5th – 12thMarch 2024, among a sample of 1,000 senior SME decision makers (under 250 employees, including sole traders) in the UK aged 18+, and 2,000 UK consumers aged 18+.

[1]^[1] https://www.fsb.org.uk/uk-small-business-statistics.html