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June 22, 2022

Hybrid working behind fraud spike as Britain becomes more cashless

A new report reveals that fraud has risen on the back of the pandemic, but so has the push towards turning societies cashless

By Eric Johansson

British businesses are increasingly exposed to insider fraud due to being forced to adopt hybrid working models at the same time as the UK is growing more cashless, according to a new report.

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Fifty-two per cent of businesses in the UK have fallen prey to insider fraud in the last year, according to a new report from fintech firm Bottomline. That figure jumped to 63% in the States. The research consisted of an online survey among 1,600 financial decision-makers in Great Britain and the United States.

The researchers linked the surging cases of insider fraud with the pandemic forcing many corporates to accept that hybrid working models for their employees.

“Businesses, especially SMBs, have been seriously caught off guard by Covid-19 and hybrid working, leading to an unprecedented wave of fraud that hasn’t been seen for years,” said Paul Fannon, managing director of global business solutions at Bottomline. “If we are to reverse this worrying trend and stop fraudsters in their tracks, the industry needs to work together to accelerate the roll out of initiatives such as [confirmation of payee] in the UK and educate businesses on how they can detect fraud before it’s too late.”

Insider fraud and cashless solutions on the rise

At the same time as insider fraud jumped, countries grew increasingly cashless. Customers in most developed countries have become more accustomed to paying for things digitally or using contactless payments over the years, rather than using physical money. The coronavirus crisis accelerated this trend.

Businesses are following suit. Fifty-three per cent of businesses in the UK started to accept new payment methods in 2021. That figure was 63% across the pond. In contrast, 22% of businesses in Blighty and 26% Stateside have dropped cash entirely over the past year, according to the research.

“Covid-19 has led to one of the biggest changes to the global economy and society in more than 50 years,” said Craig Saks, Bottomline’s CEO. “Now, everything is digital-first, and if businesses are to survive and thrive in this new digital economy, they must embrace digital payments. Innovative firms should start exploring how new payment technologies and initiatives will impact them and the industries in which they operate going forward.”

The risks of going cashless

The trend towards a cashless society is not without risk. The UK going cashless could leave 11.5 million Brits behind, a report from ATM network Link warned in March 2022. The alarmed authors worried that bank branch closures and the digitalisation of retail could leave vulnerable people who are at risk of spiralling into debt, becoming isolated from others, or losing trust in the financial system altogether. Similar warnings have been raised by likes consumer advocacy group Which? and different market stakeholders.

However, industry stakeholders reject those claims. Instead, they believe countries going cashless will lead to more inclusivity.

“Rather than intended to isolate members of society, the move to cashless is reflective of businesses listening and responding to consumer trends and preferences,” Jakob Pethick, chief commercial officer at embedded finance provider YouLend, recently told Verdict. “It’s not about reducing the number of payment options – but increasing them. Most businesses will likely offer a mix of payment options with their audience demographic in mind, realising the benefits of the cashless revolution simply by giving their customers more choice.

According to GlobalData’s Payment Instrument Analytics, the volume of cash transactions stood at 20.8 billion in 2012. Comparatively, payment cards and mobile wallets were used in 10.5 billion and mobile wallets 304 million transactions respectively. But between 2012 and 2021, cash transaction volume recorded a compound annual growth rate of -13.7%, with most payments in the UK now taking place using non-cash options.

GlobalData is the parent company of Verdict and its sister publications.

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Prepare for changes in the Payments market

 The Payments market has seen drastic changes in the past few years, with this only expected to continue. What does your company need to do to prepare for what’s to come? GlobalData’s Payment Trends for 2022 report explores the key trends in technology, consumer habits, and regulations shaping the market. We also identify the leading companies in this changing market, giving you a competitive market outlook. This report covers the impact of:
  • ESG
  • E-commerce
  • Mobile payments
  • Alternative payment rails (Real-Time Payments, Blockchain, BNPL)
  • Fraud & Cybersecurity
  • Regulations
Download the report now to learn essential strategies to maximize your growth in the face of rapid change.
by GlobalData
Enter your details here to receive your free Report.

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