As dollars flow into faster payments, doors open for criminals

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Many countries around the world are at various stages of implementing real time payments, and challenges still remain.

In early October, Federal Reserve Gov. Lael Brainard outlined the U.S. central bank’s commitment to addressing current systematic issues limiting the growth of RTP.

Summing up the challenge faced in markets around the world, she said that “faster payment innovations are striving to keep up with this demand, but gaps in the underlying infrastructure pose challenges associated with safety, efficiency and accessibility.”

As a result, Brainard added, “we need an infrastructure that can support continued growth and innovation, with a goal of settlement on a 24/7 basis in real time.”
With established initiatives such as The Clearing House’s RTP system however, America is in a good position to accelerate adoption and implementation of faster payments.

Investment is not limited to America, though. Across the Atlantic, the TARGET instant payment settlement (TIPS) service has launched to increase the speed of euro payments in the European Union, settling payments in central bank money, irrespective of the opening hours of a user’s local bank.

In the southern hemisphere, it has now been months since the launch of Australia’s New Payments Platform (NPP), and Lindsay Boulton, assist governor at the Reserve Bank of Australia, has highlighted the government’s hesitancy to move services to the platform without it being firstly tested by industry. To encourage private sector interest in the scheme, a sandbox for developers to test APIs has been unveiled, but there is clearly more work to be done.

But Capgemini is optimistic, expecting that NPP will drive noncash transactions' growth by not only enabling RTP, but also providing further value-added features.

These are just examples of two countries and global demand for faster payments is clearly going to grow. This growth, however, can provide the environment for increased fraud if new systems fail to learn from the problems experienced by previous implementations.

It is well known that where money goes, fraud follows. The ability to move funds quickly allows criminals to evade traditional checks like the identification of out-of-pattern activity, automated clearing house block services and manual reviews.

There are various security approaches available to fight against fraud, but tokenization has already proved successful in protecting in-store and online card payments, with all the major payment systems, digital wallets and original equipment manufacturers adopting the technology.

Replacing unique sensitive information or data with a token can significantly reduce the risk associated with account-based fraud, fostering safe and secure RTP initiatives across the world.

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