Money Mobility Playbook: How to Manage Security, Customer Experience Risks

No matter what form it takes, risk is inherent in money mobility, since delivering instant or near-instant payments to multiple endpoints in a range of currencies means making your way through red tape of all sorts — including compliance and security issues — as efficiently as possible at a large scale.

Financial institutions (FIs) and FinTechs must be able to navigate these challenges and continue to meet the security and experience-based needs of their customers in myriad ways across multiple offerings. “The Money Mobility Playbook: Delivering Money-out Mobility at Scale,” a PYMNTS and Ingo Money collaboration, looks at four areas where these challenges present themselves: debit and prepaid cards; digital wallets, digital currencies and peer-to-peer (P2P) apps; instant issue accounts and disbursements; and merchants and retail payments.

The Playbook also presents the steps FIs and FinTechs can take to implement a successful money mobility innovation strategy regardless of the technology they currently use.

Debit card payments fraud has risen by 20% since the start of the pandemic, meaning FIs have had to find new ways to meet their customers’ needs without compromising their experiences, while also managing compliance concerns and ensuring the activities of both senders and payment recipients are compliant with know your customer (KYC) regulations.

Prepaid cards are often used by money launderers and fraudsters for less-than-noble activities, so many FIs have steered clear of them lately, even though they can be valuable tools for financial inclusion. Fraud is especially difficult to monitor on prepaid cards since most can be bought with no ID needed.

When it comes to digital wallets, digital currencies and P2P apps, convenience has captivated many consumers and how they think about payments. Instant payments that can be scheduled and customized are now the norm for consumers sending money online.

“Digital wallets are emblematic of modern money mobility, as they make it easier for consumers to streamline payments and track spending,” the Playbook stated, but they can also be hampered by interconnectivity issues, meaning consumers sometimes need multiple wallets to achieve payments ubiquity.

“As instant payments technology has become more accessible, consumers have integrated it into their everyday purchasing habits, from sending money to friends through P2P apps and scheduling bill payments to tracking savings accounts contributions through FinTech apps,” the Playbook stated.

P2P payment apps Venmo and Zelle, among others, have made it easier to send instant payments to friends, retailers or strangers, meaning consumers continue to expect that experience to be available to them on all platforms, despite the exponential risk to them and their FIs.

Instant issue accounts, meanwhile, are popular consumer experience features that offer high value to consumers prioritizing convenience and significant risk to payments processors and FIs, the Playbook stated. U.S. banks lost approximately $3.5 billion in new account fraud in 2021, and inadequate user authentication processes caused much of that loss.

“Instant accounts present an added security challenge for FIs because safely matching consumers’ demand for swift account-opening requires access to data that identifies bad actors or the use of synthetic identities,” according to the Playbook. “This means FIs need a robust risk identification system in place before offering instant account access.”

When it comes to merchant and retail payments, merchants have a unique burden in maintaining compliance, security and consumers’ high expectations. They must not only filter out fraudulent chargebacks — total chargebacks cost the industry an estimated $800 million in 2021 — but they must also address card-not-present (CNP) fraud, with those sorts of transactions up 25% since the start of the pandemic and related fraud and security countermoves also on the upswing in the past two-plus years.

“Rich, multichannel data on users, including potential bad actors, can limit false positives while promoting strong transaction risk management,” according to the Playbook. “Money Mobility networks are thus critical for retailers seeking to balance security and consumer engagement.

For more information, download “The Money Mobility Playbook: Delivering Money-out Mobility at Scale.”