Instant Payments Speed Need for Fraud Prevention

PYMNTS asked industry executives across the payments and digital commerce landscape to give us their take on the pivotal shifts, technological advancements and strategies that have shaped business in 2023. Plaid Head of Payments Rahul Hampole says the stage is set for fast, secure money movement to drive FinTech growth into a new decade.

Instant bank payments will be an inevitable part of business in 2024.

The payment method provides several benefits to businesses that are looking to offer better and more instantaneous experiences. It’s also a more cost-efficient way to move money.

With the RTP® Network and the FedNow® Service gaining traction in 2023, companies are looking at ways to lower the barrier to entry for consumers by delivering incentives and new experiences that will encourage broader adoption. Use cases like bill pay and rental payments will likely see broad adoption, with eCommerce right behind.

However, while enabling rapid access to funds has its conveniences, fraudsters also crave speed and convenience. As financial flows accelerate, the need for upfront fraud prevention during customer onboarding will be paramount. Savvy consumers will demand it as well. According to a Plaid survey, 76% of FinTech users prefer to verify their identity when signing up for a new service.

Sophisticated identity verification and authentication technology to mitigate fraud are also emerging. This year, businesses will take a step toward implementing bulletproof solutions to confirm users are who they claim to be during sign-up without introducing friction. Liveness checks, ID validation, geolocation and biometric tracking will become the price of entry for FinTechs planning for an instant, on-demand payments environment with little patience for fraud.

Also emerging are network-based anti-fraud solutions that break down silos to deliver a more comprehensive and robust risk and fraud prevention solution. More companies will likely take a network-based approach to assessing fraud across the user journey — from initial sign-up to money movement and ongoing use. Players that can bring network-based anti-fraud solutions at scale will become critical to the broad adoption of instant bank payments.

With FedNow’s innovation, the stage is set for fast, secure money movement to drive FinTech growth into a new decade.