Move to same-day and real-time payments increases fraud risk for banks.
In the wake of this week’s rollout by NACHA, The Electronic Payments Association, of same-day ACH payments in the U.S., fraud departments at originating and receiving banks should be bracing for the new risks posed by faster payments. Developing robust anti-fraud procedures is even more critical now, as same-day ACH is the first step toward the move to real-time payments over the course of the next two years.
Risks posed by faster payments can be greatly reduced by ensuring fraud departments are adequately authenticating and verifying ACH payment senders, payment recipients and transaction amounts from origination to receipt.
From a high-level perspective, hopefully fraud departments see the risk mitigates and the potential for increased fraud risk posed by faster payments. One of the things that fraud departments need to do is ensure that they have those adequate controls in place upfront.
That means originating banks need to have robust authentication of senders who initiate transactions, as well as strong security for files that are sent to the receiving bank. On the origination side, you need to make sure you have transaction monitoring, or strong authentication of all the controls you need at file initiation.
Receiving banks need to ensure that they have tools in place to review transactions within the same day they are received. If a transaction is flagged, then it has to be returned that day. Banks will no longer have more than 24 hours to review and return those transactions from their exceptions departments.
With faster payments, banks must have adequate controls established in order to protect themselves and their customers. If you have any questions about the tools and procedures needed to ensure that your bank is protected as the U.S. moves to real-time payments, call ITPAC today.