Is it safe for SMEs to do business online?

It is widely accepted in the business community that for small to medium-sized enterprises (SMEs) to prosper in the future they...

It is widely accepted in the business community that for small to medium-sized enterprises (SMEs) to prosper in the future they will need to be able to do business online.

The problem lies not in convincing SMEs that going online is the way ahead, but - with the plethora of online security breaches that continue to hit the headlines - in convincing SMEs that such transactions are secure.

The British Chambers of Commerce (BCC) has issued a manifesto on e-business, part of which recommends that the government should facilitate moves by SMEs into the e-business arena. It believes that it is not fear of technology that prevents SMEs from going online, but rather the question of who carries the can when things go wrong.

Neil Barrett, technical director of security company IRM, believes the emphasis placed by banking organisations on technology is clouding the real issue: how much trust can a business have in the security systems implemented?

He said: "They've got to realise that confidence in e-business is not necessarily a technical issue. It's not a case of whether the bank has an impressive encryption system or firewall, but whether the customer trusts the system the bank has put in place."

Barrett added that it was not the fear of a system breach or failure that concerns the SME, but rather who suffers the consequences of such an occurrence.

"The biggest thing that banks can do - which applies to trading with SMEs as well as private individuals - is offer to underwrite the cost aspect of any fraud attack, so that any worry the SME may have of being hit by a huge bill is removed," he said.

Another way banks could support SMEs more effectively is by giving them the option to pay for banking support for e-business credit card payment processing through a percentage of each transaction rather than a flat fee, Barrett said. This view is echoed by the finance director of a leading online computer hardware and peripherals vendor, who said: "If banks charge a flat fee, you get a skewed weight of processing cost set against the smaller-value transactions, thus penalising companies that want to sell only low-value items such as books."

The UK has long been dubbed the worst country for credit card fraud, but Barrett believes this is not because a greater proportion of fraudulent activity takes place in this country, but because the UK has better mechanisms for detecting such fraud.

"The figures are more to do with reporting fraudulent credit card transactions, as attacks are more likely to be reported here and investigated, rather than simply being taken as read that they are indeed fraudulent."

Another problem facing companies trading online is the lack of a cost-effective delivery confirmation service that would prevent false claims for goods not received.

Barrett said: "The only way available at the moment is assured delivery, where you sign for goods upon receipt, but this is a costly method. Mail order companies such as Freemans and Grattan have had their own types of assured delivery for many years, and SMEs can take pointers from them as to how they operate cost-effectively."

So are the government and the financial institutions succeeding in the struggle to convince SMEs to go online? Barrett believes they are.

"I think the battle to win over the confidence of SMEs in online security is being won as we are seeing a steady growth of SMEs entering the market. You could point to the strides made by banks in gaining confidence and providing assurance, but there is the more pragmatic point when looking at this of can they afford not to go online, as the cost-benefit and ease of delivery channels the Net provides are there for all to see."

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