Growing Fraud Risks Complicate Banks’ Push Toward Instant Payments

A growing body of evidence suggests that businesses may be looking in the wrong place for payment fraud risk.

That was the central finding of PYMNTS Intelligence’s January Money Mobility Tracker®, “Instant Myths: Debunking Faster-Payments Fraud Fears.” The report examined how fraud concerns continue to shape instant payments adoption, even as data shows that legacy methods, particularly checks, carry higher exposure. While demand for real-time money movement is rising, hesitation persists.

Businesses cited fears of scams, account data sharing and artificial intelligence-driven attacks. Yet industry data indicates that many of the risks associated with instant payments are often overstated when compared with traditional payment rails.

The report highlighted several data points that illustrate this disconnect between perception and performance:

Fraud is the second-largest payment pain point for firms surveyed, as 16% of businesses experienced payment fraud in the past year.

Government findings cited in the report revealed a 16 times higher likelihood that checks will be lost, stolen or altered compared with electronic transfers.

Businesses now cite enhanced security as a top benefit of adopting instant payments at 37%, up from 25% a year earlier.

Beyond these headline figures, the broader story was about how risk is being reassessed in a real-time environment. Many businesses continue to rely on checks because they are embedded in contractor and vendor workflows. More than half of the firms that experienced fraud still use checks, while businesses untouched by fraud use them less frequently. Despite documented exposure to loss, theft and alteration, checks are often perceived as safer because they are physical instruments. That perception persists even as fraud becomes more automated and more expensive.

AI is intensifying concerns. Industry research cited in the Tracker showed that more than 4 in 10 fraud attempts now involve AI-driven techniques, with average fraud losses exceeding $400,000 per organization. Roughly one-third of firms reported losses that reached $1 million. As attacks grow more sophisticated, institutions face pressure not only from fraud itself but from compliance demands and faster settlement cycles.

Financial institutions are feeling the strain. Nearly half reported rising fraud sophistication, expanding compliance requirements and faster settlement speeds as concurrent pressures. The report found that 85% expect fraud to increase as instant payments scale. That expectation influences adoption decisions, even as operational data from real-time networks showed limited fraud impact to date.

At the same time, confidence is building. Only 3% of institutions reported significant fraud impact tied to faster payments, and a growing share of financial professionals described digital payment systems as having a positive operational effect. The report found that 76% of organizations expected to update their payments strategy over the next three years. Real-time rails are expanding monitoring capabilities and shared scam classification tools. The federal government’s phase-out of paper checks signals further concern over legacy risk.

The report concluded that reducing fraud fear is less about dismissing risk and more about reallocating attention. Fraud detection, real-time monitoring and clearer governance frameworks are becoming central to payments strategy. Institutions that invest in these capabilities are better positioned to manage always-on payment environments. The shift to instant payments is not simply about speed. It is about visibility, control and measurable security performance.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.