The Clearing House (TCH) launched the RTP® network in 2017—the first new payment rail in the U.S. in over forty years. Fraud is always a top-of-mind business concern with payments. However, the new payment rails themselves, such as RTP, are the most secure the country has seen. This is also true for real-time payments network from the Federal Reserve, the FedNow® Service, which went live in 2023. Since real-time payments are based on a credit push model, funds just can’t be pulled out of an account from an external party. The sender has to initiate the payment directly from their account, a design element of the networks meant to thwart various fraud schemes that benefit from a debit model. There are a ton of fraud prevention tools available and practices that are already in place. However, consumer education remains the most important prevention tool available. Here’s what financial institutions should educate their account holders on to fight fraud.
Funds are irrevocable
With many legacy payment types, a consumer can recall a payment made in error before it’s cleared and settled, and in some cases up to 70 days after it has. Real-time payments happen in, well, real-time. So the payer cannot cancel the transaction and the funds are available for the payee to use or withdraw immediately. As with other payment types, but even more imperative in this case, consumers should therefore only initiate real-time payments to trusted recipients and triple-check that they have the correct information.
Financial institutions don’t ask for login information out of the blue
It can’t be emphasized enough. Consumers need to know that their financial institution will never ask for online banking credentials through an outside channel, whether it be by phone, email, or text. Both consumers and businesses should know the signs of fraud, such as spelling errors, suspicious sender email addresses, and ‘urgent’ requests. Keep yourself aware of account activity at all times by taking advantage of account alerts. And, of course, login information should be secure and hard to guess.
Business Email Compromise (BEC)
CEO fraud and authentication fraud are top threats to real-time payments. Layered fraud approaches including matrix-based approvals, biometric-based credentials, and the use of tokens for releasing payments can help, and so can employee vigilance. Employees should automatically verify the source of a request for payment from suppliers and billers. Using templates for payments or approval matrix will keep fraud to a minimum.
Read Best Practices to Prevent Payment Fraud for more on fraud.
Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.
