Fraudsters Attack B2B Payments as Supply Chains Prove to Be Vulnerable

As the world of business payments continues to grow, so does the threat of fraud.

While to the rest of the world, B2B payments represent commerce’s backbone — to a fraudster drawn to the large volumes of money exchanged between companies, they look like a sweet spot.

“Fraud is growing as fast, or faster, than the pace that the overall B2B market is growing, so we have to fight hard to implement tools and stay ahead of it,” Eric Frankovic, general manager of business payments at WEX, told PYMNTS, adding that the scale and complexity of B2B transactions create opportunities for fraudsters.

One of the factors fueling this rise is the decentralization of business operations, particularly due to the growth of the gig economy and the shift to remote work. Since the pandemic, many employees now work from home or other remote locations, removed from the controlled security environment of a central office.

“It’s become harder to monitor all the various ways that fraudsters attack businesses,” Frankovic said.

Despite the rise of digital B2B payments, check fraud remains a major concern, particularly in the United States.

Read also: Three Hidden Assets That Define Modern Business Payments

While checks may seem old-fashioned to some, they are still prevalent and persistent in U.S. business transactions — particularly across certain sectors — making them a prime target for fraudsters.

Sectors like construction, healthcare and government are especially at risk, as they manage thousands of payments across multiple departments and suppliers.

“As the supply chain broadens and branches out, there’s just more access and entry points for fraudsters,” Frankovic said.

The decentralized nature of these industries, as well as the sheer volume of transactions they process, makes it difficult to monitor every transaction, creating opportunities for fraudsters to exploit weak points in the system.

Frankovic said WEX’s own fraud team has categorized four main types of fraud that businesses encounter in the payment space: merchant fraud, or fraudulent invoices and payments issued by fake or dishonest merchants; bank identification number (BIN) attacks, where bad actors test many card numbers to identify valid ones that can be exploited; compromised card fraud, which includes both physical theft of cards and the theft of virtual card numbers, often via merchant manipulation; and customer and employee misuse, or fraud that occurs from within the organization, where employees or customers take advantage of the payment system.

Each type requires a unique approach, and companies must continually adapt their defenses to counter evolving threats.

Fraud in B2B payments shows no sign of slowing down, and businesses must remain vigilant. Advanced technologies, particularly artificial intelligence and machine learning, have started to become tools for businesses looking to fight back against fraudsters.

“Fraudsters are using AI, so we need to use it to combat their attacks,” said Frankovic, adding that AI-powered systems can detect patterns in transactions and flag suspicious activity that would be impossible for humans to identify in real time, proactively labeling and neutralizing threats.

Fraudsters have increasingly employed AI to craft more convincing phishing emails and even follow-up phone calls to give their schemes an air of legitimacy. That’s why, to stay ahead, payments companies like WEX are continuing to invest in the same advanced technologies.

However, Frankovic said technology alone is not a silver bullet. Human oversight, robust processes and continual education are equally important in maintaining effective fraud defenses.

The key to success is collaboration, whether through AI-driven technology, industry networks or partnerships with dedicated payment providers, he said. Businesses that take a proactive approach to fraud prevention will be better positioned to protect themselves and their customers in the evolving world of B2B payments.

“As you’re choosing a B2B payments solution, don’t always choose just the best price,” Frankovic said. “Look for those companies that are investing as much into fraud and protecting your business as you are.”

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