2017 headlined some of the biggest data breaches in history, from Equifax to the Uber data breach that affected 57 million driver and rider accounts. Uber paid a $100,000 ransom to hackers in 2016 to erase the data, but it only recently came to light after a board investigation of Uber's business practices.
In the Equifax hack alone, 142 million customers' sensitive personal data was compromised, upping the ante for a new era of cybersecurity.
Data breaches affect scores of businesses, and it's always a costly lesson to learn. For U.S. businesses alone, a data breach can cost an estimated $7 million taking regulatory fines, remediation, and public relations costs into consideration. Any way you look at it, this is every company's nightmare.
Blockchain offers some hope that a distributed ledger will inspire new technologies to thwart digital fraud through its decentralized, self-verifying record of transactions. This would lend an unrivaled degree of certainty to our financial exchanges with businesses and individuals.
But with plenty of outdated software and processes still used by businesses, many are unwittingly letting fraud in the door. One such process for companies is the practice of writing checks. It's hard to stop others from impersonating your company when they have access to check stock—the ticket that grants them permission to do so.
While data hacking and check fraud may differ wildly as preventative measures go, the way to protect your business is the same: determine root causes of fraud.
According to the Association for Financial Professionals annual survey data:
"Check fraud and business email compromise are both on the uptick. Checks continue to be the most popular method for committing payments fraud. 75 percent of organizations that were victims of fraud in 2016 experienced check fraud—an increase from 71 percent in 2015. This is a reversal of the declining trend AFP has observed since 2010."
This means that check fraud is actually on the rise for businesses.
While the same can't be said of data hackers, check fraudsters can rather easily be kept at bay. And it starts by eliminating checks. Businesses have the option of transitioning off check payments in favor of electronic options like ACH or card payments, but many are reluctant to change old processes.
Having a third-party payments provider can do more than keep outsiders from walking away with sensitive banking information. It can also combat internal fraud by adding an extra layer of security between your company and vendor banking information.
In an era when fraudsters may not only compromise your company's data—but that of your customers or vendors as well—getting a payment service provider is well worth preventing lawsuits and regulatory fines that follow data breaches.
The benefit of electronic payments is in its traceability. Electronic approvals and signatures means there's an electronic record for every action taken before and after payment is made. Approvers can pass payments on to second or third levels of approval before submission, or stop them from being paid entirely, depending on their level of authorization.
This kind of control is unprecedented in comparison to writing checks. Once a check is in the mail—wrong amount, duplicate, or otherwise—it's impossible to fix without stopping payment, causing undue frustration or delay for the vendor.
By only working with trusted service providers that meet rigorous industry compliance standards, you can establish a strong information security program at your company that safeguards sensitive data. Companies should be diligent in acknowledging all threats that prevent the degradation of its service. Compliance reports and security standards are two ways for companies to remain stalwart against a data breach. But it takes a cumulative effort, across the board to keep a company's data and payments secure.
Eliminating risk where you can, checks included, is a great place to start.