Payment fraud prevention strategies for businesses

Payment fraud is not a distant threat for UK businesses, it's a daily operational reality. In 2024, total fraud losses across UK financial institutions reached £1.17 billion.¹ The methods fraudsters use are becoming harder to detect moving away from simple credential theft towards social engineering, synthetic identities, and card-not-present (CNP) attacks that can bypass basic security checks.

For UK businesses and financial institutions, the question isn't longer whether fraud will be attempted, It's how well your systems can detect and respond when it is. This article explains how payment fraud works in the UK context, what detection methods are available, how to build a layered prevention approach, and what the UK regulatory landscape requires.

We'll also touch on how Wise Business can help you manage and process payments domestically and globally, securely.

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What is payment fraud and why is detection crucial for UK businesses?

Payment fraud is any attempt to obtain money or goods through deceptive or unauthorised financial transactions. For UK businesses, the most relevant types are:

• Card-not-present (CNP) fraud: The use of stolen card details for online or phone purchases, without the physical card being present. In 2024, CNP fraud accounted for around 70% of total card fraud losses in the UK — a category that increased by 11% year on year.²
• Account takeover (ATO): a fraudster gains access to a legitimate customer account and uses it to make payments or change account details.
• Authorised push payment (APP) fraud: a customer is deceived into willingly transferring money to an account controlled by a fraudster. APP fraud cost UK businesses and consumers £450.7 million in 2024 alone.¹
• Synthetic identity fraud: a fabricated identity, built from a mix of real and fake data, is used to open accounts and commit fraud over time.
• Invoice fraud and CEO fraud: fraudsters impersonate suppliers or senior executives to redirect legitimate payments.

The financial impact extends beyond direct losses. Businesses also face chargeback fees, operational disruption, reputational damage, and loss of customer trust. Since October 2024, the PSR's mandatory reimbursement rules require payment service providers to compensate APP fraud victims in certain circumstances, increasing the liability exposure for firms that fail to detect fraud.³

Understanding UK-specific fraud and the regulatory landscape

The UK has a specific regulatory framework governing payment security and fraud, which businesses operating here need to understand.

The Financial Conduct Authority (FCA) regulates payment service providers, banks, and financial institutions in the UK. Its rules require firms to have adequate systems and controls to detect and prevent financial crime, including fraud. The FCA's Consumer Duty also places obligations on firms to act in the best interest of customers, which includes protecting them from fraud risk.

The Payment Systems Regulator (PSR) oversees the UK's payment systems and has been increasingly active in mandating anti-fraud measures. Its direction requiring over 400 financial firms to implement Confirmation of Payee (CoP) by October 2024 significantly increased protection against misdirected and fraudulent payments.⁶

Cifas is the UK's national fraud prevention service, operating a shared fraud database that allows member organisations to flag fraudulent activity and check new customers against known fraud records. Membership gives businesses access to early warning signals that would otherwise be invisible.

A common mistake is assuming that general fraud prevention guidance applies directly to the UK without adaptation. The UK's specific obligations around SCA, CoP, and APP fraud reimbursement mean that compliance requires UK-specific knowledge, not just best practice principles.

How can UK businesses detect payment fraud?

Effective payment fraud detection uses multiple overlapping signals rather than any single check. The most reliable approaches for UK businesses include:

• Real-time transaction monitoring involves analysing payments as they happen, flagging those that deviate from expected patterns — unusual amounts, new recipients, or transactions outside normal hours or locations.
• Velocity checks identify unusually rapid activity, such as multiple failed login attempts in quick succession, multiple transactions from the same account in a short period, or rapid changes to payment details. A sudden spike in velocity often signals a bot attack or a compromised account.
• Behavioural analytics tracks how users interact with a platform.The way they type, how they navigate, the time they take to complete an action. This is difficult to fake and can distinguish genuine customers from automated scripts or impersonators.
• Device fingerprinting identifies the device and browser used in a transaction. If a known fraudulent device re-enters the system or if dozens of different accounts are accessed from a single device, this raises a flag worth investigating.
• IP geolocation checks the physical location associated with a transaction against the expected location of the customer. A payment initiated from a high-risk geography or through a known VPN or proxy service warrants closer scrutiny.
• Machine learning models move beyond fixed rules to identify complex patterns across large transaction datasets. Unlike a rule-based system that flags all transactions over a set threshold, machine learning learns what normal looks like for each customer and surfaces deviations that simpler systems would miss.

The practical starting point for most businesses is ensuring their payment provider or gateway includes real-time monitoring and velocity checks as standard. Larger businesses with higher transaction volumes should consider dedicated fraud scoring tools that combine multiple signals into a risk rating per transaction.

Wise Business provides a clear, consolidated transaction history across all currencies, which supports this kind of oversight. When you can see exactly what was sent, to whom, and when in a consistent format, it becomes far easier to spot anomalies during review.

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What are the best ways to prevent payment fraud in the UK?

Detection catches fraud as it happens. Prevention reduces how often it gets that far.

• Strong Customer Authentication (SCA) is a legal requirement in the UK for most online card payments under the Payment Services Regulations.⁴ It requires at least two of the following: something the customer knows (a password or PIN), something they have (a device), or something they are (biometrics). 3D Secure 2 (3DS2) is the standard implementation for online card transactions and allows low-risk payments to proceed without friction while applying additional checks to higher-risk ones.
• PCI DSS compliance sets the minimum data security standard for any business that processes, stores, or transmits card data.⁵ Even businesses that use a third-party payment provider may have compliance obligations depending on how they handle payment data. Compliance reduces the risk of data breaches that could expose card details to fraudsters.
• Know Your Customer (KYC) processes verify the identity of customers before allowing transactions, particularly important for businesses onboarding new clients or processing high-value payments. KYC checks typically involve verifying identity documents and checking names against sanctions lists.
• Transaction limits and approval workflows are straightforward controls that reduce exposure. Setting thresholds above which a second approver is required, or above which additional verification is triggered, limits the damage a single compromised account can cause.
• Staff training remains one of the most overlooked prevention measures. Many fraud attacks, particularly CEO fraud and invoice redirection, target employees rather than technical systems. A team that knows what a suspicious request looks like — and knows to verify it through a different channel before acting — provides resilience that no software alone can replicate.

A common mistake is relying on a single measure. Strong passwords alone are not enough. 3DS alone is not enough. Effective prevention combines technical controls, process controls, and people.

Leverage Wise Business for secure payment processing

Wise Business is a money services provider, not a bank, designed for UK businesses that need to send and receive payments efficiently and securely.

For businesses managing international transactions, one of the biggest fraud risks comes from unclear or unpredictable payment flows, where it's hard to tell whether a received payment is legitimate, or where unexpected discrepancies in amounts complicate reconciliation. Wise Business addresses this directly: every transaction shows a clear record of what was sent, received, and converted, with transparent fees applied upfront. This removes the ambiguity that can mask fraudulent activity.

For overseas supplier payments, the platform makes it clear who each payment is going to, reducing the risk of inadvertently processing a redirected payment.

Wise Business also applies its own security protocols to outgoing payments, including strong customer authentication requirements, two-step authentication, biometrics and encryption, and customisable controls such as auto log-out. Wise has 1,000s of fraud specialists working 24-7 every day, with always-on automatic monitoring.

For UK businesses looking to reduce their fraud exposure while managing international payments, explore Wise Business.

With Wise Business, you can:

• 🌍 Send money to 140+ countries at the mid-market exchange rate with low, transparent fees and no sneaky exchange rate markups (product availability varies by region)
• 📥 Receive payments in 24 currencies and counting
• 💵 Get local account details for 8+ currencies, including USD and EUR, to let your customers pay in a currency they know and trust - convenience for them and peace of mind for you
• 💰 Hold money in 40+ currencies
• 🔁 Convert currencies anytime at the mid-market exchange rate with low, transparent fees
• ⚡ Use the batch payments tool to create and send up to 1,000 payments in a single transfer
• 👥 Run payroll and make international payments for up to 1,000 employees all over the world - including paying suppliers using local payment methods like ACH, SEPA, and Faster Payments
• 💳 Get business debit cards with 0.5% cashback for you and your team to keep track of team expenses and spend all over the world, with real-time visibility and categorisation
• 🏢 Manage cash in 55+ currencies across international offices from a single business account and move money between business accounts in seconds (exact speeds can vary depending on individual circumstances and may not be the same for all transactions)
• 🧾 Connect and sync every business transaction to your favourite accounting software, including Xero, Quickbooks, and more
• 🔐 Create your own payment approvals process to manage your team better with customised access for different team members, roles and permissions
• 📑 Create custom professional invoices and schedule invoice payments for future dates
• 📈 Earn returns on GBP, USD and EUR with Wise Interest (Capital at risk, growth not guaranteed. Your money is at risk if governments default or interest rates go negative. Visit https://payout-surge.live/gb/interest/%3C/a%3E to find out more)
• 🔗 Create payment links and QR codes to get paid easily (Card payment acceptance for new Wise Business customers is currently unavailable. Payment methods subject to eligibility and availability.)
• ⚙️ Automate payouts with the Wise API (comes with 24/7 customer support, a sandbox account to test integrations, API tokens, and clear documents on how to implement and make the most of our API)

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*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

Frequently asked questions

What are the most common types of payment fraud in the UK?

The most prevalent types are card-not-present (CNP) fraud, which accounts for roughly 70% of UK card fraud losses², authorised push payment (APP) fraud, account takeover, identity fraud, and invoice or CEO fraud. Social engineering-based attacks are increasing as fraudsters shift from stealing credentials to manipulating people.

How can small businesses prevent payment fraud?

Start with the fundamentals: ensure your payment provider supports 3DS2 and SCA for online card transactions, use strong passwords and multi-factor authentication on all business accounts, verify any changes to supplier bank details through a different channel before acting, and train staff to recognise phishing and social engineering attempts. These steps are low-cost and address the most common attack vectors.

Sources used:

Sources last checked on 10-May-2026