30/04/2019.

New fraud checks threaten SMEs.

Small businesses in Britain could stand to lose billions in sales under new anti-fraud regulations being introduced this year, industry leaders have warned. Under the new Strong Customer Authentication (SCA) system set to come into effect from mid-September, online purchases worth more than £30 will require a “two-factor authentication” process – such as both a bank card and a password, or a mobile phone and a fingerprint. Brought in under an EU directive, the new measures are intended to raise the security of online transactions, in line with the chip-and-PIN system enforced on sales of over £30 in stores.

The Federation of Small Businesses (FSB), the Institute of Directors, and the British Retail Consortium (BRC) have all responded with concern to the planned implementation of the new anti-fraud rules, urging for the maximum single-factor authentication sale price to be increased and citing fears that the new regulations could make it impossible for many businesses to process online transactions. They say most small businesses are unlikely to be prepared for the changes on time.

Fast roll-out “bad for all concerned”

With many businesses expected not to be ready to accommodate the new SCA regulation by September, the British Retail Consortium has projected that as much as £60bn in online sales could be lost, with analysts warning of “significant disruption”.

A spokesperson for the BRC urged both the government and Financial Conduct Authority to “ensure a consistent and coordinated approach to implementation, clearly explaining the upcoming changes to consumers and businesses alike,” and adding: “Without a smooth and successful implementation… there is a real risk that these changes will create difficulties for consumers when making purchases online.”

FSB chairman Mike Cherry similarly noted that whilst small businesses were “committed to customer security,” plans to roll out the new safety checks “before businesses and shoppers are prepared for it” would be “bad for all concerned,” risking mass disruption to online trade. In addition, Mr. Cherry highlighted the lack of awareness amongst small businesses regarding the new system, saying: “We’re a few months from enforcement and hardly anyone has even heard of it.”

New fraud checks threaten SMEs.

Whilst a lack of preparation for the new safety checks poses a threat for businesses of all sizes, smaller businesses are likely to be particularly affected due to their smaller capacity to absorb a sudden loss of sales. In order to mitigate the potentially disruptive impact of the new EU requirements, SMEs are advised to take steps to come into compliance with the SCA rules as quickly as possible, planning ahead to foresee and manage the costs.

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Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class commercial credit information that can help you avoid being over extended to commercial customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your business customers.

We regularly publish lists of the latest company insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.

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