Fraud is Getting Smarter – So Should Your Payment Security

By SheueChee (Chee) Beh, Senior Vice President, APAC at Yuno

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The Threat is Real and Growing

Fraud is evolving, and fast. Picture this: you’re reviewing your daily business transactions and spot a single, unusually large payment to an unfamiliar vendor that has already been processed. On the surface, everything appears normal. But a closer inspection reveals the invoice details and account credentials have been subtly altered. Meanwhile, the same fraud filters meant to protect your business from suspicious activity flagged legitimate customer transactions as potential threats. Several real purchases were blocked, carts were abandoned, and revenue slipped away – all while the fraudster walked away with the funds. This isn’t fiction – it’s the new reality of digital commerce.

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The digital payments space in APAC is booming. The region is expected to process 1.46 trillion cashless transactions by 2028, and in Southeast Asia alone, 94% of e-commerce payments are already digital. But with this growth comes rising cybercrime. For the first time, digital fraud has overtaken traditional fraud in the region – putting payment security front and centre for businesses of all sizes.

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This is particularly concerning for SMEs, which often operate with limited IT resources,  rely on lean finance and payments teams, and must navigate an increasingly complex payment environment to remain relevant. This complexity is compounded by ongoing economic volatility, where managing cash flow is crucial to survival. In this context, even a single incident of payment fraud can severely disrupt operations and damage customer trust. SMEs are under pressure to do more with less, leaving them particularly vulnerable to sophisticated threats.

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Against this backdrop, even a single payment fraud incident or poor customer checkout experience could significantly impact an SME’s operations and customer trust.

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How AI and Payment Orchestration Work Together to Fight Fraud

Cybercrimes are growing increasingly as bad actors use sophisticated technology to personalise their attacks. Fraudsters can now automate phishing scams and convincingly impersonate payment providers, internal stakeholders, or even customers to gain access to sensitive systems. In APAC alone, cybercrimes and data breaches have been seen across banks, insurance, and even NGOs. 

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AI-enabled card testing schemes are also on the rise. These involve running stolen card numbers through small online purchases to test their validity. Once confirmed, broader, large-scale attacks are launched.

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Fortunately, AI also plays a central role in fraud prevention. Banks and payment processors already use machine learning to analyse vast volumes of transactions, detecting anomalies in real time and flagging suspicious activity. Unlike static rule-based systems, these AI models evolve with the threat landscape, continuously improving their ability to detect fraud while reducing false positives. This results in more accurate decisions and less friction for legitimate customers.

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What’s Emerging

The next frontier in fraud defense is the use of generative AI (GenAI). GenAI can be prompted to explain the reasoning behind flagged transactions, uncover patterns that were previously missed, and suggest strategic changes to fraud prevention logic. This makes fraud detection more intelligent and transparent. Additionally, GenAI can also help companies to identify good transactions and ensure that these transactions are processed seamlessly. With GenAI, businesses can gain better visibility into their risk landscape and continuously refine their security frameworks.

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What Does This Mean for SMEs?

Fraud is no longer a problem just for large enterprises. In fact, SMEs are increasingly targeted because of the perception that they lack the tools to adequately defend themselves. Relying on outdated, rule-based systems increases their exposure to fraud and can also cause friction by incorrectly blocking legitimate transactions, leading to lost sales and eroded customer trust.

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However, SMEs don’t need to build AI infrastructure from scratch – they can work with industry partners, such as smart payment orchestration platforms, to bolster their fraud detection capabilities. Offering embedded AI capabilities that simplify and optimise the entire payment process, these platforms act as a central hub, connecting multiple payment providers, fraud detection tools, and financial services without overwhelming internal teams.

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By routing transactions securely and applying AI-driven fraud checks directly within the payment flow, smart payment orchestration platforms allow SMEs to stay agile, reduce risk, and preserve customer trust. They scale with your business and don’t require deep technical teams to maintain.

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Why SMEs Must Act Now

In today’s digital economy, securing your payments is about more than just preventing fraud. It’s about enabling trust, ensuring continuity, and laying the foundation for sustainable growth.

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Fraud tactics are getting smarter with AI powering both sides of the equation. For SMEs to survive and thrive, they must adopt smarter, more agile defenses. AI-powered payment orchestration isn’t a luxury, it’s a necessity – and the time to act is now.

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This article originally appeared in SME Horizon.

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