The emergence of real-time/immediate payment systems world-wide bring both new corporate treasury opportunities, e.g.:
- real time authorisation/clearing
- intra-day availability of funds
- intra-day interbank settlement
- late-day interbank settlement
- greater flexibility so corporates can:
- make payments same day when they see funds arriving in their account, so planning is improved
- choose to make urgent payment which may have been forgotten or informed late by their subs.
Banks are also seeing advantages from:
- innovative real-time payments products that meet the needs of the new API economy
- reducing cash and cheque usage
- opportunities to create new services, such as Request for Payment.
BUT real-time / immediate payments bring with them a whole new set of fraud prevention problems brought about by the new dimension of real-time/immediate payment, e.g. although Barclays Bank have an impressive holistic approach to fraud prevention, even they have found that the Faster Payments Service which, although it is not international, is so quick they often cannot trace the payment.
Banks need to adapt
ICON’s Richard Dear, in an article on Bob's Guide - see, wrote that from their experience in UK & Europe “there are three key areas of risk for organizations to manage in the move to real-time payments:
- Making accurate fraud decisions quickly: This means that banks need to move to systems that don’t rely on historical data. It is essential that instant payables and receivables systems which have integrated fraud systems that keep one step ahead of the criminals to make informed fraud decisions within seconds.
- Preparing for targeted fraud attacks: Many existing fraud systems have no automated decision workflow and rely on manual review. Fraudsters may exploit this vulnerability, hitting banks and corporates with a number of attacks in short timeframes, similar to a brute force attack
- Managing the risk of increasing fraud operations costs: Existing fraud systems which rely on manual review and static data cannot take the strain of new threats, producing too many false alerts for operations teams to deal with. To avoid increasing recruitment costs, organizations need to understand individual payment behaviour holistically, in real time, to make fast, accurate, automated decisions.”
Corporates also need to change
Corporates don’t need to have the advanced machine learning technologies and adaptive behavioural analytics that banks use, but they do need to check that their internal systems and controls can cope with the increasing move to immediate payments because they are processed as they happen and cannot be reversed – there is no time for manual fraud review steps.
Countdown to same day ACH debits in USA
The USA ACH already has same day credits, in Phase 2 they are launching their new Same Day ACH Debits service in 147 days, on September 15, 2017. There are many posts on details on how the new service will work on the NACHA web-site, including:
- How Protection 1 Puts Customers First with the Same Day ACH Solution
- “Check and Correct” effective entry dates for same day ACH Debits.
CTMfile take: Moving to same day ACH payments brings with it many advantages, but the new risks need to be managed.
The world is moving to same day ACH payments
In USA NACHA takes Steps towards Same-Day ACH Settlement
Global payments moving to same day, transparent, predictable, tracked & more info
SWIFT’s Global Payment Initiative gathers pace - ICICI and AXIS are the first Indian banks to join the initiative - as banks world-wide try to improve their cross-border payment services
New fraud prevention systems & services from Barclays and Apple raise questions
But which do you trust? The problem is that fraud prevention requires a multi-faceted approach