Faster Electronic Payments Could Help or Hurt Fraud.
With newer payment technology, electronic payments have become much faster, more so for ACH and eCheck payments. Where ACH was taking 2 or 3 business days to process, it will only take a day at most starting 2016.
Also, with organizations like NACHA and the Federal Reserve pushing for even faster ACH and eCheck payments, consumers and merchants are on both sides of the fence. NACHA will have Same Day ACH Rolling out in Phases Starting 2016.
Some feel that faster payments will mean easier and more commerce, while others feel that faster payments will mean faster fraud too.
- A faster payments system would help consumers to make payments easily and quickly.
- It will appease those last minute bill payers who wait until the last minute to pay their bills using ACH Payments.
- Businesses could make fast emergency payments to employees or vendors via ACH Payments.
- Friends could pay one another instantly for shared rides or restaurant checks.
More Secure
This faster payment system would most likely be more secure as money is being moved very quickly and there must not be any room for fraud. It would have fraud prevention built in pretty much from its inception, something that many use this website link to help them fight against quite often when it comes to electronic payments.
Related: Is Stolen Customer Data Really a Huge Problem?
Simple and Accessible
It would also be simple to use, and cost-efficient. It would have to be accessible to all irrespective of how savvy one is with electronic payments. ATMs would be part of this faster payment system to make it a lot more accessible. Users would transfer money to others using ATMs instead of having to get online on a computer. The consumer would make a payment simply by using a registered mobile number, an email or username. The payee would receive the money almost instantly.
Many non-sophisticated consumers, particularly the elderly and less educated, fall prey to fake IRS calls, and insurance and other phone scams. They will need some form of protection or education by their banks before they are introduced to such a faster payment system.
Easier for Conmen too?
Once a payment is made, it would be irrevocable so that the payee receives the money immediately. This feature of the faster payment system would also make it a lot easier for conmen to take advantage of the system. The speed at which transactions happen, would mean that there is no time for someone to initiate a stop payment for a payment that they made to a scammer or conman. A feature like a stop payment for a check may be needed. It would also be difficult for fraud victims to get their money back as by the time action is initiated by your bank, the conman’s account may have already been cleaned out.
Related: Best Ways to Accept Payments From Your Customers
Faster Payments Task Force
The Fed has setup a Faster Payments Task Force especially for situations like these. It is researching all the various advantages and disadvantages of faster electronic payments. It will put in place strong protections to fight payment fraud as well as to recover payments in fraud cases.
Remedies and Refunds for Fraudulent Fast Payments
In cases of fraud, the consumer may be able to get a refund from the conman’s bank, but there are no hard and fast rules. It is totally at the bank’s discretion but I feel that banks would do best to issue refunds in genuine fraud cases. It’s just good customer service.
So, our major goal should be to detect, prevent, and remedy the loopholes that allow fraud. Perpetrators of fraud should be blacklisted and punished to the fullest extent of the law. Fraud reports should be shared among financial institutions and made publicly available online so that consumers can research scams and stay informed.
Fraud monitoring is already built into electronic payments today, but it all depends on the banks ability or willingness to seek out and address fraud or potential problems. The Bank Secrecy Act reminds banks and other financial institutions of their required procedures and obligations.
Fraud Monitoring Increased for Faster Payments
NACHA, the payments industry group that supervises the ACH network, is also recommending and/or requiring financial institutions and payment processors to increase their fraud monitoring so that the faster payments initiative is also able to detect, prevent, and remedy the loopholes that allow fraud.
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