Managed Services Empower Banks to Combat Real-Time Payments Fraud

In the dynamic landscape of real-time payments, banks face an ongoing battle against fraudsters seizing opportunities presented by faster transaction speeds, as stated in PYMNTS News. Laura Sullivan, senior product manager at Form3, highlights the increasing threat posed by fraudsters amidst the rising popularity of faster payments in the United States.

Sullivan emphasizes the urgency for banks to remain vigilant across payment rails, especially with the advent of the RTP® Network and the FedNow® Service. She acknowledges the prevailing concern within the financial industry regarding the potential for accelerated fraud facilitated by faster payment systems.

Traditionally, the financial sector has relied on slower ACH payments, but the shift towards real-time payments necessitates a reevaluation of payment examination processes. Sullivan notes that while real-time payment schemes offer banks the ability to scrutinize transactions for potential issues, they cannot delay payments for scanning, posing a challenge in fraud detection.

Moreover, Sullivan underscores the repercussions of delayed payments, highlighting how customers may grow disillusioned with the perceived instant nature of real-time payments if transactions undergo prolonged holding periods.

To address these challenges, Sullivan advocates for the adoption of end-to-end managed services, which streamline messaging requirements and sanctions screenings to facilitate real-time fund availability. Managed services leverage technology to interface with various vendors supporting fraud and sanctions screening, enabling real-time monitoring and automation of manual processes.

Form3’s experience with managed services, particularly in the UK, has proven effective in identifying fraud patterns and reducing fraud rates significantly. Sullivan emphasizes the importance of striking the right balance between friction and seamless transactions, leveraging advanced data and analytics to detect suspicious activities.

Looking ahead, Sullivan anticipates the continuous evolution of fraud tactics and underscores the advantage of leveraging vendor services for adaptive fraud monitoring. As the threat landscape evolves, Sullivan asserts the importance of vendors rapidly adjusting their strategies to stay ahead of fraudsters.

In combating fraud within the realm of faster payments, Sullivan asserts, «this is going to be a continuously evolving field.» Leveraging the expertise gained from combating fraud in other markets, Form3 stands ready to assist U.S. banks in safeguarding against emerging threats in real-time payments.

By embracing managed services and leveraging advanced technologies, banks can strengthen their defense mechanisms against fraud in the era of real-time payments.