The dark side of online payments for small businesses
New forms of payment are popping up all the time, but as e-commerce increases, so too do the risks for Australian small businesses.
In recent years, payment technologies have evolved at a dizzying pace. We are now in an era where fast, mobile online banking is expected – where increasingly smart phones and tablets are replacing debit cards.
And it’s not just big businesses that are taking advantage of these new avenues. Increasingly, smaller independent operations are getting in on the act. Unfortunately, these smaller companies present tempting targets to fraudsters.
The rise of e-commerce
E-commerce is big business. In 2015, sales topped $10bn, and not just among the larger firms. From major corporations to tiny family firms, businesses of all sizes are using e-commerce to increase sales and tap into new markets. Payment gateways such as Paypal democratise the process, making it possible to offer quick seamless payments from your own site.
Mobile phone companies are also getting in on the act. Apple, Samsung and Android Pay have all attracted headlines for their ability to let customers make contactless payments using their smart phones.
So far so good. It’s fast and convenient – both things customers love, and the more ways they have to complete a transaction, the happier businesses will be – everyone wins.
But…. (and there is always a but)... e-commerce solutions also create vulnerabilities. The more information that is stored in the cloud, the more potential weak points fraudsters might attack. The problem can be made worse because small business in particular may not know where the most sensitive data is stored or how it is secured.
As the number of e-commerce providers increase, so too does the variation in the level of security they offer. Before choosing a gateway, every company must understand what level of security they offer.
Ultimately it’s a game of cat and mouse. Fraudsters develop a line of attack, security measures are developed in response; the more technology comes into play, the more difficult it is to keep track of vulnerabilities.
The costs can be severe. According to the Australian government, the average cost of a cyber-crime to a business is $276,323. Losses can come through theft, but also fines and lawsuits from your own customers – not to mention damage to reputation.
Insurance is important
An important part of the solution lies in cyber insurance policies. However, many small businesses don’t know what these are and how they can help them. This can cover for attacks such as privacy breaches, system damage, business interruption, computer viruses, hacking and much more.
It’s important for small and medium-sized businesses to address the issue of cybercrime. This is not just something for the big end of town. As larger companies tighten security measures, the criminals go looking for easier targets – and they’re finding them in hundreds of smaller firms who might not even realise they are at risk.
That’s why it’s crucial to understand the evolving threat and develop your defences accordingly. Here at CGU, we’ve made a point of providing high-quality cyber insurance services particularly for small to medium sized businesses. Get in touch with an insurance adviser to find out more about how you can protect your business from cyber crime.