Adapt To Faster Payments With Enterprise Fraud Prevention

New payment methods bring opportunities for innovation and value-added services. In the case of immediate payments, this could include P2P, P2B or B2B payments, where speed and certainty are of the essence.

The need for speed has a double edge, and in the payments world, this double edge is more choice for businesses and consumers against potential opportunities for fraudsters to tap into new payment models. ACI Worldwide advises that, as the world moves toward immediate payment ecosystems, a holistic view of the transaction, with layered controls from origination to the application of real-time rules, is the only way to push the pedal to the metal on faster payments and put the brakes on fraud.

In a world where transactions now take seconds rather than minutes, hours or days to process and approve, the prevention controls must be exercised in real time with intelligence applied across the medium of channels that might be used in today’s digital world, including cards and online banking transactions.

The U.K.’s Faster Payments initiative, which traces its genesis to 2008, has seen fraud losses around online banking grow from £22.6 million in 2007 to £52.5 million in 2008 and then to £59.7 million in 2009, before new and more sophisticated security measures took effect. As new payment types are introduced, organizations need to prepare and learn from prior experiences.

That’s the topic of a recent whitepaper by ACI, which advocates that being “immediate” also means adopting a proactive, enterprise mindset towards fraud prevention and a willingness to invest across a number of fronts, from monitoring tools to staff training.

ACI advocates that effective fraud prevention means firms must monitor cohesively across the channels in which they operate. Strong risk assessment necessitates segmenting and isolating the vulnerabilities in each channel’s customer touchpoint and implementing controls that integrate new data feeds, plus adding the ability to deploy third-party tools as needed for more robust detection (for example, in terms of device integrity and malware identification) and prevention. A strong risk management program begins with authentication at the point of initial login, then spotting manipulation or session anomalies, while, at the same time, recognizing and validating established and true end user behavior.

On the customer experience side of the transaction, it’s important for firms to balance security to customer experience in the channel. This means that the enterprise must set target thresholds to minimize false positives that may hold up transactions, leading to unnecessary customer friction. This is even more critical in an instant/faster payments environment. ACI’s recent consumer card fraud survey cites that, after experiencing fraud, 40 percent of consumers use a replacement card less — at least, in some situations — than they used that card previously. In other words, in a situation where adoption of a new payment type is a goal, preventing fraud and providing a positive customer experience is critical.

ACI has seen reductions in false positives in excess of 40 percent with more efficient systems in place, utilizing feature functionality that brings powerful, enhanced analytics to the hands of fraud strategists, aiding them in achieving the competing objectives of delivering a high fraud detection rate and maintaining a positive customer experience at all points of interaction.

ACI maintains that rule layering, in which multiple rules are deployed across the channels throughout the enterprise, can help lead to the best defensive posturing for a firm.

Firms should strive for incremental improvements across the enterprise. Fraud prevention is an ongoing, continuously evolving mission that must keep up with the pace of change in payments — which, of course, is rapid and constant.

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