Payments Fraud in 2025: Stats and FAQs for Financial Institutions
To gather stats about payment fraud in 2025, the Association of Financial Professionals (AFP) surveyed 521 treasury professionals from a range of industries including agriculture, banking, construction, education, government, health care, insurance, real estate, and transportation. Respondents came from publicly owned and privately held companies as well as some non-profit and government organizations, with annual revenue ranging from under $50 million to over $20 billion.
The results showed several important points – payment fraud is on the rise, checks are the most vulnerable payments, and organizations plan to continue using checks. Here’s a breakdown of the numbers so that you can better understand the types of fraud facing your accountholders today.
Almost all organizations face fraud – attacks are rising.
Payment fraud attempts dropped slightly during 2022. That year, just under two-thirds of organizations reported being the victims of payment fraud. In 2023, the number jumped to 80%.
In other words, nearly all organizations face fraud attacks, and if you want your financial institution to attract and retain valuable business clients, you need to offer solutions that help commercial accountholders reduce their risk of fraud.
Which businesses are most likely to face payment fraud?
Businesses with annual revenue of at least $1 billion are more likely to face payment fraud than businesses with revenue under $1 billion. However, the numbers are high for both categories. Businesses with over $1 billion in revenue faced payment fraud at a rate of 83%, while only 73% of those with revenue less than $1 billion faced fraud.
Additionally, businesses with fewer payment accounts also faced fraud at higher risks. Businesses with at least $1 billion in revenue and fewer than 26 payment accounts faced fraud at a rate of 86%, while those above the $1 billion revenue threshold and more than 100 payment accounts only faced fraud at a rate of 80%.
Why are big companies subject to high fraud rates?
Analysts speculate that the decentralized nature of large companies makes them more susceptible to fraud. To protect themselves, these companies need to ensure that they train employees who initiate payments or have access to payment details on how to spot the signs of fraud.
To help these clients, your financial institution may want to reach out and talk with them about how to centralize their payments and train their employees about various bank products. While approximately 80% of the payment methods these companies use are centralized, a significant portion of their payment methods of decentralized, increasing their vulnerability.
Do small businesses face check fraud?
Many Main Street USA businesses and independent contractors rely on checks, and by extension, they face high rates of fraud. According to data collected by the Federal Reserve Bank of Atlanta, electricians, plumbers, and other contractors receive approximately 25% of their payments via checks. Landlords, government revenue agencies, and professional service firms such as lawyers and accountants also receive well over 10% of their payments via check.
While many big corporations have stopped accepting checks from customers, small businesses and soleprenuers are not able to follow suit. Many small businesses have reported that they have had their routing and account numbers compromised or that they have had to deal with mail theft in relation to their checks or checks mailed by clients.
Are organizations facing more fraud?
A very small portion (6%) of respondents reported that they had experienced less fraud than in previous years. Just over a quarter (26%) reported that they had experienced more fraud than the previous year, and 68% reported experiencing the same amount of fraud.
How much more fraud are organizations facing?
Of the organizations that reported an increase in payment fraud, about two-thirds said that the fraud had increased by 25% or less, but 5% reported seeing an increase of 75% or more. Here is a breakdown of the increase in fraud based on the percentage of respondents:
- 10% – unsure
- 25% – less than 10% increase
- 39% – 10 to 25% increase
- 16% 26% to 50% increase
- 5% – 51 to 75% increase
- 5% – more than 75% increase.
What is the source of payment fraud?
About two-thirds of organizations reported that payment fraud originates outside their organization. This number includes stolen checks, business email compromise, and other threats.
Checks are the most vulnerable payment method.
Checks offer bad actors a relatively low-tech option for committing fraud. Checks tend to be easier to exploit than debit/credit cards and other types of payment methods, and 65% of respondents reported that they were victims of check fraud.
To protect your customers and reduce the risk of losses at your financial institution, you need a check fraud detection and prevention solution that looks for fraudulent, forged, and altered checks.
Is check fraud increasing?
Although checks are the most vulnerable payment method, the rates of attack on this payment method are not increasing, but the portion of checks subject to fraud is increasing.
A decade ago in 2014, check fraud affected over three-quarters of organizattions. The rate dropped to just 55% in 2016, and then, it went back into the 70 to 75% range from 2017 to 2019. Since 2020, the rate has stayed around 65%.
However, over this same time period, the portion of checks subject to fraud has increased. Although the rate of payment fraud has stayed the same, check use has gone down during that period. Over the past five years, the Federal Reserve has processed 8% fewer checks, but during the same time, Suspicious Activity Reports (SAR) for checks increased by 40% and mail fraud increased by 57%.
What are the fraud rates on other payment methods?
One-third (33%) of organizations reported fraud related to ACH debits, 24% reported wire transfer fraud, 10% reported corporate credit card fraud, and 19% reported ACH credit fraud. Only 4% reported fraud related to cash.
Real-time payments are also subject to fraud. One percent of companies with annual revenue over $1 billion reported payment fraud related to real-time payments. About five percent of organizations with revenue under $1 billion reported real-time payment fraud.
Is fraud up on other payment methods?
Fraud rates decreased on wire transfers, corporate credit cards, and ACH credits compared to the previous year. Rates increased on check fraud, ACH debits, and cash.
Why is wire payment fraud falling as ACH credit fraud increases?
Wire transfers must go through treasury while ACH credits come through accounts payable (AP). Bad actors find it easier to compromise AP departments because they only need to compromise a single employee with the right access levels. Additionally, ACH credits are done in batches, making fraud harder to detect.
Address verification services may help to reduce both of these types of fraud by adding an additional layer of security to transactions.
Organizations plan to continue to use checks.
Despite the vulnerability of checks, most organizations (70%) plan to continue using them. To meet the needs of these customers, you need a strong approach to check fraud detection, but you may also want to focus on helping commercial clients identify and implement alternative payment methods as well.
While doing so, remember to focus on fraud prevention education. Adopting new payment methods opens the door to new risks, which your customers need to understand.
How often do organizations use checks?
About 75% of organizations report that they use checks, and over a third say that they make over 25% of their payments using checks.
How do organizations disburse checks?
In spite of rising mail theft, 82% of organizations still use the general mail to disburse checks. Just over half (51%) use a commercial carrier, 26% use USPS with tracking, and 20% use hand delivery or couriers. Only 17% use eChecks.
Business email compromise targets ACH credits.
All organizations face a high risk of business email compromise (BEC) or phishing attacks. Historically, these attacks focused on wire transfers, but recently, ACH credits have emerged as the most significant threat. BEC allows bad actors to carry out fraud through social engineering attacks, even if they don’t know how to hack into an email system.
Reducing the risk of BEC requires employee training and awareness. Businesses can solidify their approaches by creating policies and procedures that are designed to limit their exposure to attacks. Ideally, this process requires documentation, testing, and reviews. However, while 58% of companies have completed documenting their policies, only 54% completed reviews of their policies. Fewer than half (49%) are testing their processes in action by sending out dummy attack emails to employees.
Roughly a quarter of respondents have partially completed all three elements of BEC protection. However, 10% of respondents have not done any testing, and 5% have not done any documentation or reviews. In all three categories, 11 to 13% of respondents say they are unsure of their organization’s efforts. This presents a significant opportunity to financial institutions that want to help their accountholders reduce their risk of fraud.
Fraud Protection You Can Trust
At SQN Banking Systems, we keep up with fraud stats and trends so that we can provide our clients with the highest level of fraud prevention services. Ready to improve fraud detection and prevention at your financial institution? Want to foster trust in your account holders, while also protecting your bottom line? Then, contact us today.
At SQN Banking Systems, we provide fraud protection you can trust. We will start with a fraud process review and then help you customize the right approach for your unique financial institution.