Fear of Fraud Shouldn’t Hinder Instant Payment Progress, Says US Faster Payments Council
As instant payments continue to transform the fintech landscape, concerns about evolving fraud risks have sparked significant debate, as stated in Finextra. However, Reed Luhtanen, Executive Director of the US Faster Payments Council (FPC), emphasizes that fear of fraud should not impede the advancement of this crucial technology.
Speaking in an interview with FinextraTV, Luhtanen acknowledged the challenges posed by fraud but highlighted the rarity of such incidents in the United States and globally. He stated, “Fraud over instant payment rails in the United States has been vanishingly rare, and in other markets that have enabled even a wider array of use cases than we have, fraud and instant payments is very little across the world.” While addressing vulnerabilities is important, Luhtanen stressed, “It also shouldn’t be the thing that makes us not move forward.”
For financial institutions beginning their journey toward instant payments, the process can seem overwhelming. Luhtanen provided a straightforward roadmap:
- Develop a Customer-Centric Strategy: Start by focusing on existing customers and how to serve them better, while also identifying ways to attract new customers.
- Identify Key Partners: Collaborate with partners who can help execute the strategy effectively.
Only after these steps should institutions move into project planning and implementation. Luhtanen’s advice underscores the importance of taking a measured, strategic approach to adopting instant payments while leveraging resources such as the FPC’s free supplier catalog to find suitable partners.
Despite growing adoption rates worldwide, some stakeholders remain hesitant about instant payments, particularly in the U.S. According to Luhtanen, this apprehension stems from uncertainty around fraud prevention and resolution. He explained, “You’ve got to gain trust and increase certainty by reducing fraud, but on the other side, everybody needs to understand what are the puts and takes, how are losses allocated, how are errors resolved when there is fraud.”
Luhtanen believes that while concerns about fraud are valid, they should inspire comprehensive safety measures rather than discourage progress. The key lies in balancing preventative and reactive strategies to address potential risks without stalling innovation.
As instant payment technology evolves, the fintech industry must prioritize discussions about fraud and its implications. While opinions on the severity of the issue may vary, the importance of fostering trust and ensuring secure payment systems is a shared priority.