Mitigate Risk and Prevent Fraud with These Tips
The digital takeover in the financial industry has ushered in a new era of instant payments with a tempting promise of unprecedented speed and convenience. However, as technology continues to advance, both the associated benefits and challenges will advance right alongside it. In today’s blog, we will be discussing essential strategies your institution can utilize to help keep your instant payments secure, allowing your institution to stay up-to-date and safe.
The Challenges of Secure Instant Payments
Instant payments offer a multitude of benefits for financial institutions, like enhancing the customer experience, differentiating your financial institution in a competitive market, and growing revenue by facilitating immediate transfers between bank accounts.
Traditional methods of payment, such as checks and cash, involve manual handling and complicated processing, making them less efficient compared to instant payments. According to the U.S. Faster Payments Council, it is projected that 70-80% of financial institutions will be enabled to receive instant payments by 2028, driven by borrowers’ desire for features like mobile wallets and easier, quicker access to funds. Instant payment networks also benefit various financial institutions, including credit unions, by providing faster and more flexible transactions.
While getting ahead of the curve is often crucial to the success of your business, there may still be some hesitancies about hopping on such a new product since the path to convenience is not one without challenges. One of the greatest of these challenges is fraud. Instant payments can be vulnerable to fraudulent activity like:
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- Spoofing
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- Account Takeovers
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- Authorized Push Payment Fraud
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- Money Laundering
However, there is no questioning that instant payments are worth the risk. The growing demand for instant payments has significantly impacted consumer expectations in financial transactions. This shift towards instant payment solutions not only improves efficiency but also meets regulatory standards, positioning instant payments as a crucial evolution in the financial ecosystem. Learning how to implement instant payments into your borrowers’ transactions safely and securely is crucial to keeping up with your competition while maintaining the integrity of your institution’s payments.
Strategies for Securing Instant Payments for Your Borrowers
The rapid evolution and innovative nature of instant payments may create risks that many institutions have not faced before. However, there are effective strategies you can implement to protect both yourself and your valued borrowers in the rapid world of instant payments. These include:
Real-Time Transaction Monitoring for Instant Payment Systems
Real-time transaction monitoring involves continuous observations of transactions. This allows your institution to identify suspicious activity in real time, granting the chance to minimize loss and respond effectively. Real-time monitoring supports faster transactions by quickly identifying and responding to suspicious activity. Fraud can occur at any time of the day — especially outside of business hours. This makes constant monitoring, 24/7/365, a critical part of risk mitigation.
Two Factor Authentication
Passwords can be guessed by hackers, making them vulnerable to fraud. Two-factor authentication works to offset this by requiring two forms of identification when accessing one’s sensitive information, like a password and code sent to a user’s phone. This enhances the security of electronic payments by requiring multiple forms of identification, ensuring that transactions are more secure and less prone to unauthorized access.
Automation, Automation, Automation!
Automating as many aspects of your instant payments transactions as possible can be incredibly useful for reducing the risk of human error. Automation improves the efficiency of funds transfers by reducing human error and catching abnormal activity that may have otherwise gone unnoticed.
You can create automated rules and programs to help catch suspicious activity, whether in your borrowers’ transactions or logins. Optimizing payment processes through the implementation of Central Orchestration Platforms and Confirmation of Payee (CoP) mechanisms can be also strong tools for enhancing security and efficiency.
Educating Borrowers and Financial Institutions
Your borrowers are an essential shield against fraud. The more educated and aware they are about the different risks they may encounter in their transactions, the better they will be able to protect themselves from falling victim to it. Educating borrowers about the risks and precautions involved in transferring money and online shopping is a crucial step to preventing fraud, as ensuring accuracy in the recipient’s account information can mitigate the risks associated with these transactions.
Secure Your Instant Payments with Our Webinar!
Instant payments are quickly becoming the norm. This makes it imperative for institutions to stay up-to-date with the latest innovations while keeping their transactions secure. Before your financial institution hops into the world of Instant Payments, you will benefit from starting with SWIVEL’s Connect2Core™ platform, a real-time payment data posting hub that allows your institution to give your borrowers the benefits of instant payments that are safer and more secure.
Getting started with Connect2Core™ now will ensure your institution is implemented and ready to go when we launch Instant Payments! The instant payment network enables a near-instantaneous transfer of funds, offering faster processing times, enhanced security features, and improved user control over financial transactions.
Not ready to take that jump, yet? We understand that the journey to secure instant payments can seem overwhelming. If you want to learn more about revolutionizing your transactions, check out our latest webinar, Instant Payments Essentials: Mitigating Risks & Preventing Fraud, where we take a deep dive into the ways your financial institution can keep up with ever-evolving technology in the financial world while mitigating the risks associated with it!
