How real-time pay is pressuring bank authentication

Real-time payments are changing how money moves, but they are also creating new headaches for the financing industry. The speed of these transactions means there is almost no time to catch fraud before the money is gone. For retailers and lenders offering instant financing or instant payouts, this creates a major security gap. Currently, there is no federal standard for how banks and lenders should verify identities in a real-time environment. This has led to a 'patchwork' of different security rules that vary from one institution to another. For your business, this means the risk of 'authorized user fraud' is rising. This happens when a legitimate customer is tricked into sending money or opening a credit line for a scammer. Because the payment is instant and irrevocable, you may have little recourse once the transaction is finalized. Experts are now pushing for more advanced authentication, such as behavioral biometrics, to verify users without slowing down the checkout experience. As a merchant, you should be aware that the lenders you partner with may soon implement stricter, more invisible security layers. These updates are necessary to prevent losses that could eventually lead to higher processing fees or tighter credit approvals for your customers.

Source: American Banker — Top News

← Return to the library· Submit a correction