Will Faster ACH Payments Cause Problems for Fraud Monitoring?

 

Will Faster ACH Payments Cause Problems for Fraud Monitoring?

 

More and more consumers are looking for faster payment options. Mobile banking is a highly preferred payment option. However, it is important that financial institutions take stringent steps to prevent fraud to protect customers and assets. A recent announcement came from NACHA on the launch of the first phase of faster ACH (Automated Clearing House) payments, requiring originating financial institutions to process same-day ACH payments through two clearing windows. This requires completion of transactions in 2 hours and 15 minutes. With that, Same Day ACH is Now Live!

According to the 2015 Global Payments Report compiled by the Boston Consulting Group, global banks processed over $400 trillion in non-cash payments in 2015. With the rising crowd of same-day transactions, how will financial institutions confidently handle the ever-rising volume within hours?

While most fraud monitoring tools can handle processing within days, it is a huge challenge for financial institutions to handle the rising volumes within hours. First, it is crucial to take preventative measures to detect and stop fraudulent electronic payments.

Related: ACH, Paper Checks, eChecks, Electronic Payments! Confused Yet?

 

Immediate Action is Now A Priority

Fraudulent activity must be flagged immediately, since under faster ACH payments, funds are completely settled within hours, posing a high risk to institutions and their customers. When the payment is released from an originating point, it is very difficult to recover.

The need of the hour is predictive models designed on the basis of consortium intelligence to prevent fraud before the completion of a transaction and release of a payment. Fraud may be prevented based on consortium models using industry-level data from different financial institutions. As a result, these models give financial institutions a real-time risk score for each transaction. This could help financial institutions score transactions in real time, thus helping suspension of high risk payments immediately.

Effective implementation of fraud prevention capabilities is the need of the hour. This would involve detection, investigation, and prevention of financial crimes affecting businesses around the world. Stringent fraud prevention measures would build customer trust and help improve profitability.

Related: ACH Payments Increase Sales by 6%.

 

Bottom Line

Real-time fraud detection and prevention is important to protect assets of financial institutions and customer data, helping build trust. Customers must feel that they can safely make transactions and benefit from the more convenient, faster ACH payments.

 

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