Payment Fraud Prevention: Hidden Risks Businesses May Miss

Hidden Risks in Payments:

What Businesses May Miss

When most people think about payments processing, they think about speed and convenience. They're focused on getting money from point A to point B as quickly as possible. But effective payment fraud prevention starts earlier than many businesses realize, because much of the risk is built in before a payment is ever created.

Today's fraud landscape looks nothing like it did even a few years ago. Fraud is no longer just a poorly worded email riddled with spelling mistakes. It's smarter, more targeted, and often convincing enough to pass right under the radar.

In a recent episode of FX in Focus, Corpay Cross-Border's podcast series, host Barbara Allice, Team Lead, Enterprise Associates, sat down with Rita Sabri, North American Compliance Director, and Marlene Theberge, Product Management Lead, to unpack how payment fraud is evolving and what businesses can do about it.

To fully understand payment fraud prevention and the associated aspects: mistakes, processes and cost, read on.

The Illusion of a 'Clean' Transaction

The conversation opened up with an excellent approach.Barbara emphasized how ‘when most people think about payments processing, they think about speed, convenience, and getting money from point A to point B. But what many businesses don't realize is that every payment carries a certain level of risk.’

‘Today's fraud landscape looks very different than it did even a few years ago. Fraud is no longer just suspicious emails filled with spelling mistakes or obvious scams. It has become smarter, more targeted, and in many cases, extremely convincing.’

Here's a common assumption worth challenging: if a payment clears screening, it's safe.

It isn't.

Fraudsters have grown sophisticated enough to exploit legitimate accounts and trusted business relationships, often through compromised communications and social engineering. Screening tools remain an essential layer of defense, but they're only one layer. Modern fraud frequently hides behind transactions that look completely normal.

"Just because a payment clears screening doesn't automatically mean it's safe. Fraudsters are becoming very sophisticated these days; they often use legitimate accounts and trusted businesses while leveraging compromised communication and social engineering," Marlene Thebergesaid.

This is especially true in cross-border payments to emerging and growth markets. A transaction can move through the right rails, carry valid identifiers, and settle successfully--while still landing in the wrong account.

Where Things Actually Break – Understanding the mistakes with Cross-Border Payments

Most payment failures don't happen because a system breaks. They happen when people, process, and pressure intersect.

Verification steps get skipped because urgency overrides judgment, or because someone assumes another person has already checked. Fraudsters know this, and they target human behavior more than technology.

A common tactic: a client receives 'updated' banking details from a payee or from someone posing as one over email, and accepts the change without verification. By the time the issue surfaces, funds have usually already settled, and in many jurisdictions, recovery rates are low.

Manual processes compound the problem. The highest risk lives not because people are careless, but because the process itself relies too heavily on individual judgment and inconsistent verification. Add in the complexity of international payments, with different banks, languages, and regulatory expectations, and the opportunities for something to slip through only multiply.

"In cross-border payments, especially those going to emerging and growth markets, the risk posed by that illusion of a clean payment is really amplified," Rita Sabri explained. "What we see is a transaction that moves through the right rails, includes valid identifiers, and settles successfully but ultimately settles to the wrong account. The systems are performing exactly as they're designed, but the outcome of the payment is wrong."

Why Faster Payments Raise the Stakes for Fraud Prevention.

Payments are getting faster - real-time, same-day, instant cross-border. That convenience comes at a cost: the faster payments move, the smaller the window to catch a problem before funds are gone.

"As payments become faster, the window to detect and stop fraud also becomes much smaller. Once a payment is sent out, recovering those funds is extremely difficult. That's why prevention has to happen before the payment is initiated," Rita noted.

Global standards are responding. ISO 20022 is improving the quality and consistency of payment data, while frameworks like Verification Of Payee (Europe) and Confirmation of Payee (UK) are gaining traction. All of them share the same underlying principle: validate information before funds move, because prevention is far more effective than recovery.

Fraudsters understand this too, and they use urgency, deliberately pressuring people to act before proper verification can happen. Once a payment is released, there's no buffer left.

Designing Risk Out of the Process – How to Avoid a Payment Fraud

This is where product design has to step in early, particularly at two critical moments:

Vendor onboarding, when bank data first moves from its source into a business's systems

Updates to existing vendor details, especially last-minute changes submitted by email

The common thread: get sensitive data out of unsecured channels like email and phone entirely. A compromised inbox often goes undetected and if that inbox has been used to collect vendor bank details over time, a fraudster who gains access has effectively hit the jackpot.

Equally important is clear visibility and auditability into any changes made to bank account information, so that when details are updated, there's a fast, confident way to confirm they're legitimate.

Fraud Prevention Is a Shared Responsibility

"Fraud prevention used to be viewed primarily as a compliance responsibility, but modern fraud impacts every part of the organization - from operations and technology to customer experience and reputation," Rita said.

Modern fraud touches operations, technology, customer experience, and reputation which means preventing it requires accountability across the whole business, not just one function.

Visibility is central to that shift. Managing bank details in a securely hosted, centralized repository rather than scattered across inboxes and spreadsheets is one concrete way to get it. But the process only works if it’s actually designed and embedded into real payment workflows. The time to think about fraud isn't when a payment goes out; it's before bank details ever enter the system.

How Corpay Cross-Border Connections Supports Secure Beneficiary Onboarding

Corpay's answer to this problem is Cross-Border Connections, a secure platform that removes the insecure channels - phone and email - from the beneficiary bank data collection process entirely. Instead of a client's staff manually collecting and entering vendors’ sensitive banking details into the database on a vendor's behalf, beneficiaries (whether B2B suppliers or B2C recipients) enter their own bank data directly into a secure Corpay platform protected by multi-factor authentication.

"By allowing your vendors to enter their own bank details directly into a secure platform, rather than sending it to you via an insecure channel and having someone on your staff enter it manually, we're reducing manual touch points and reducing the risks associated with them," Marlene said.

That shift matters in a few concrete ways:

• Fewer manual touch points. Fewer people handling bank data means fewer opportunities for mistakes or malicious action.

• A clear audit trail. Every update is tied to who made it and when, closing the door on the ‘updated banking details via email’ scenario that fraudsters exploit.

• A single, centralized repository. Bank data lives outside individual inboxes, with visibility governed by permissions rather than whoever happens to have the email thread.

• Review before payment. Any edits to bank details are explicitly flagged for review and acceptance before a payment can be made.

The result: fewer touch points, less manual handling, fewer onboarding errors, and reduced exposure to business email compromise and related fraud tactics.

It works because it's cross-functional by design. Product focuses on building secure, intuitive experiences. Compliance ensures those experiences meet regulatory and risk standards. Enterprise management operationalizes the controls across Corpay's global payment footprint. Beneficiary onboarding isn't just a feature it's a risk control that protects customers and reinforces the integrity of every payment.

The Cost of Payment Fraud in Cross-Border Payments

The financial impact of payment fraud can be significant on its own; even relatively small losses affect profitability. But the bigger concern is often reputational. Trust is difficult to build and easy to lose. Once customers, vendors, or partners lose confidence, rebuilding it can take years.

There's also an operational cost that's easy to underestimate: resources diverted to investigations’ recovery efforts, and internal teams having to communicate the issues directly to affected vendors and clients, often without a successful recovery at the end of it.

Prevention, by contrast, delivers more than risk reduction. It drives operational efficiency, stronger client trust, and safer, more scalable growth. Reduce friction and risk at the very first step of the process before a payment is even set up and you protect the business while enabling it to grow.

FAQs

Q: What is payment fraud prevention?

A: Payment fraud prevention refers to the controls, workflows, and verification steps businesses use to reduce the risk of fraudulent payments before funds move. In cross-border payments, this includes securing beneficiary bank-data collection, verifying changes to account details, reducing manual touchpoints, and reviewing updates before payment.

Q: Why can a payment that clears screening still be fraudulent?

A: A payment can clear screening and still be fraudulent if the beneficiary details were changed or manipulated before the payment was created. Fraudsters may use compromised communications, social engineering, or legitimate-looking accounts to redirect funds while the payment itself appears technically valid.

Watch the companion podcast here.

Cross-Border

Global payments

Risk management