Why Bank Wires Can Ruin Your Business
March 29, 2018
Sending bank wires is a necessity for every small business. Paying your suppliers, employees, utilities are just a few everyday scenarios that may require a trip to your bank (or at least to its website).
Since banks aren’t as simple as they say, this process is often tedious. But did you know that besides being annoying, bank wires can be downright dangerous for your business?
Read on to find out why, and how Veem can help.
According to the FBI, Business Email Compromise (BEC) is on the rise. Over the past few years, the number of BEC cases has grown by a whopping 1,300%, which accumulated a loss of $3.1 billion globally.
It’s surprisingly easy to fall prey to wire fraud. Even if you don’t believe every email you get from Nigerian princes, you can still be scammed. How?
Over the past few years, the number of BEC cases has grown by a whopping 1,300%, which accumulated a loss of $3.1 billion globally
A hacker infects the system of one of your trusted partners. They create an email address quite similar to your partner’s (often just one or two letters are different), and write you an email asking you to send their next payment to a different bank account.
Since you trust your partner, you go ahead with the transfer in good faith. You may not even realize you’ve been scammed until you get a call from your partner, asking you why you haven’t sent their payment.
But by that time, your transfer went through, the scammers have withdrawn the money and have closed the receiving account.
Just like that, your case becomes another FBI statistic.
Unfortunately, this is only one example. Many others are known, like when the BEC scammers impersonate the CEO of a large company, asking the employee responsible for transfers to send some money quickly to a bank account because there’s been an emergency.
You need to confirm any change with your business partners over the phone or in person. Even writing to a trusted email address (one from your contact list) may not be good enough
New BEC scams are surfacing every day. To protect yourself, you need to have a strong data protection system in place, and even that’s not enough.
Even though it seems like a pain, you need to confirm any change with your business partners over the phone or in person. Even writing to a trusted email address (one from your contact list) may not be good enough, as it could be hacked.
Don’t send money to anyone until you’ve spoken to them and verified that they’ve indeed changed their bank account, or they really need that unusual transfer. It’s better to be safe than sorry.
The Costs of Banking
Unfortunately, BEC scammers aren’t the only ones that can damage your business: the banks themselves are doing a pretty good job of it as well.
As we outlined in our article Why Large Financial Institutions Aren’t Built For Small Businesses, the services banks provide are usually tailored for large corporations.
Banks charge unfair foreign exchange rates, not to mention high wire fees, landing fees and many other costs - most of them hidden.
Small businesses lose money and time dealing with processes not fit for their needs. Look at international wire transfers, for example.
Banks charge unfair foreign exchange rates, not to mention high wire fees, landing fees and many other costs – most of them hidden. You only realize you’ve paid them when they show up in your statement.
And what do you pay them for? Not security, that’s for sure. After all, banks don’t verify the recipient. You could be sending money to a BEC scammer and banks couldn’t care less. And their outdated technology is no match for hackers.
Then there’s the timing. Banks are sending each transfer through a network of intermediary banks called the SWIFT network. This technology is outdated, insecure, and more than often results in late or lost payments.
Banks don’t verify the recipient. You could be sending money to a BEC scammer and banks couldn’t care less
Unbeknownst to you, your transfer travels from one bank to another until it hopefully arrives at its intended destination. Unless one of the intermediary banks messed something up, sending your transfer astray. But even if it doesn’t, the uncertainty and hidden costs piled up by the intermediary banks take their toll on every small business. The bottom line is everything, and this process hurts it.
Not to mention the biggest problem of all: your bank has no idea where your money is.
Luckily, it doesn’t have to be this way.
The next time you need to send a global payment, try Veem.
We verify the recipient, making sure that your money lands in your business partner’s account. We also provide real-time tracking, letting you know where your money is at all times.
We’ve incorporated blockchain technology, one of the safest digital technologies available, into our unique multi-rail system.
Best of all: we charge no wire fees and offer competitive foreign exchange rates. We save you money so you can spend more on growing your business.
Sign up for a free Veem account to enjoy secure international payments.