Although heads of payment report an overall decline in uncertainty, fraud risk continues to rise, introducing new challenges. Many companies report that heightened fraud concerns lead to disruptions impacting innovation and new allocations of resources, for example.
Among firms experiencing high uncertainty, 62% of heads of payment report frequently delaying or canceling innovation projects to manage fraud risk. Fraud incidents have also forced companies to reallocate resources and adjust contracts. These connections highlight the broad operational influence fraud-related uncertainty can have.
These are just some of the findings detailed in “Fraud Risk Management Pushes Innovation Delays as Uncertainty Rises,” a PYMNTS Intelligence report. This edition draws insights from a survey of 60 heads of payment representing mid-market firms with annual revenues between $100 million and $1 billion. The survey was conducted from Sept. 5 to Sept. 17.
Fraud Risk Management on the Rise
Although overall uncertainty has declined recently, fraud-related uncertainty continues to rise.
Middle-market uncertainty has trended downward in recent months. Just 22% of heads of payment reported their environment as highly uncertain in September, compared to 30% in March and June. This decline in uncertainty is consistent across middle-market firms of different revenue sizes. However, despite this overall decline, uncertainty in the categories of fraud and risk management is increasing.
In September, 28% of heads of payment reported that fraud and risk management uncertainties impacted their operations, a notable rise from 17% in March and 12% in June. This suggests fraud is playing a growing role in disrupting business processes and decision-making.
Losses can scale up. We found that 27% of heads of payment reported direct losses from fraud exceeding $500,000 in the past year. The share more than triples in high-uncertainty environments, with 85% experiencing similar losses.
Taken together, these trends indicate that effectively managing fraud risk is becoming critical for maintaining operational stability and has become an acute concern, especially for businesses in high-uncertainty environments.
Fraud Risk Delays Innovation
Many heads of payment in high-uncertainty environments delay or cancel innovation and technology initiatives over fraud risk.
Two in three heads of payment operating in high-uncertainty environments report that they frequently delay or cancel innovation and technology initiatives as a direct response to fraud risks. In this way, fraud risk can significantly impact operations outside of direct fraud fighting, especially in high-uncertainty environments.
Fraud incidents themselves drive operational disruptions that force companies to reconsider their strategies. Vendor contracts and internal processes often undergo re-engineering to manage fraud-related issues. In fact, 36% of heads of payment reported needing to adjust vendor contracts, and another 31% indicated they had to modify internal processes due to fraud incidents. These changes can be resource intensive. They can also limit the ability of businesses to focus on growth initiatives.
After all, fraud can force companies to divert resources away from growth-oriented initiatives. Although no single type of disruption was cited most by all organizations, fraud’s strain on resources was a recurring theme. Firms operating at the highest levels of uncertainty also operate with the most frequent delays and disruptions. Fraud risk fundamentally alters business priorities for companies, particularly those grappling with more uncertainty.
Broader Operational Impact of Fraud Risk
Most heads of payments expect overall uncertainty to improve in the next year, though optimism has softened since May.
PYMNTS Intelligence data shows just how much optimism regarding uncertainty decreasing has fallen in just a few months. In September, 57% of heads of payments expected improvements in their level of operational uncertainty in the next 12 months. This figure represents a drop from 67% in June.
While the overall drop is notable, data shows that heads of payments reporting high levels of uncertainty are now significantly less optimistic. Just 15% expect improvement, down from 56% in March. Heads of payments in low-uncertainty environments have a very different experience. Among these respondents, 71% still expect improvements, despite that figure having slightly dropped during the year.
Another factor is that fraud’s specific effects vary depending on exactly which companies fall victim to it. Companies facing elevated levels of uncertainty are less confident in their ability to stabilize workflows and operations in this environment. This lack of optimism could lead to more conservative decision-making, impacting innovation and long-term planning.
With fewer heads of payment expecting conditions to improve, and a clear link between more uncertain environments and delayed innovations, the need to adopt more robust fraud prevention measures seems to have broader implications for operations. These measures could help the most uncertain firms regain stability and confidence, allowing them to invest more in growth.
Fraud risk continues to drive firms’ reliance on technology and process changes.
Fraud risk drives strategic adjustments within companies, with many putting innovation plans on hold. That could be self-defeating, however, as technological innovation could be key in the fight against fraud. Heads of payment are increasingly focused on adopting technology solutions to mitigate uncertainty relating to fraud, including AI and process automation. Nearly 1 in 5 heads of payment prioritize AI as a crucial tool for managing fraud risk.
More than half of the middle-market firms surveyed have boosted their reliance on technology to reduce uncertainty in the last 30 days. This shift highlights how companies are moving beyond short-term reactions to fraud incidents and are embedding these tech-driven solutions into their broader operational frameworks.
Technology investments and operational changes will continue to shape how businesses manage fraud risks in this way. For example, the share of heads of payment who recently invested more in reducing uncertainty with AI investments rose from 6.7% in June to 22% in September. Likewise, firms continue to incorporate process automation and upgrade software platforms. Operationally, 53% of respondents introduced new processes and workflows in September, up from 33% in June, contributing to long-term resilience. This emphasis on AI and process optimization will likely expand, making these approaches central to reducing fraud-related uncertainty moving forward.
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Methodology
“Fraud Risk Management Pushes Innovation Delays as Uncertainty Rises” is based on survey data collected by PYMNTS Intelligence from Sept. 5 to Sept. 17. This report examines how fraud-related uncertainty impacts innovation, resource allocation, and operational strategies for heads of payment across various industries.
The survey targeted 60 heads of payment from mid-market firms with annual revenues between $100 million and $1 billion. The sample includes firms from diverse sectors and was designed to capture a balanced representation of responses regarding uncertainty in fraud and risk management.
