The biggest challenge in modern payments isn’t moving money instantly—it’s making sure it reaches the right person.
As payment technologies continue to evolve, fraudsters are finding new ways to exploit faster transactions, leaving financial institutions with little time to detect and stop suspicious activity. Preventing fraud now requires shifting from reactive controls to real-time, data-driven decision making.
Keeping up with the growth of fraud presents challenges beyond security alone. Financial institutions must also maintain customer trust and operational efficiency as payment experiences become faster, more seamless, and more secure. Success depends on staying one step ahead—through stronger account verification, better use of customer insights, and broader industry collaboration. In the age of AI, proactive fraud prevention has become essential.
The Challenge of New Technologies
Emerging payment technologies are delivering significant benefits for consumers and businesses, but they also introduce new risk management challenges. Stablecoin adoption, for example, continues to grow by leaps and bounds because it addresses longstanding issues such as cross-border payments and foreign exchange complexity.
Because stablecoins operate on transparent blockchain networks, investigators often have greater visibility into suspicious transactions than they do with traditional payment systems. However, the technology is still relatively new, and criminals continue to identify new ways to exploit vulnerabilities.
“Stablecoins don’t eliminate fraud, but they shift where it happens,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Blockchains are transparent and transactions are traceable, so fraud has mostly moved towards exploiting on/off-ramps—things like impersonation, fake investment opportunities, phishing, and social engineering. Stablecoins, especially regulated ones, aren’t very vulnerable, but they can lead to typically either custody and infrastructure issues or human targets.”
Real-time payments present a similar challenge. Sending money instantly has become routine, whether paying a merchant or splitting a dinner bill with friends. Consumers expect funds to arrive immediately, leaving little or no opportunity to recover money once a fraudulent payment has been authorized. Fraud must be identified and prevented before the transaction is completed.
“Instant payments remove the buffers for review and investigations that FIs have traditionally been able to rely on, making instances of fraud that much harder to track down and resolve,” said Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research. “Fraudsters now exploit faster transaction settlement in hopes that it will outpace outdated fraud detection.”
Authorized Push Payment (APP) fraud has become one of the fastest-growing forms of payment fraud worldwide. In an APP scam, criminals use social engineering or impersonation to convince victims to voluntarily send money to fraudulent accounts. In most cases, victim don’t realize they have been deceived until after the funds have been transferred—and are often impossible to recover. Preventing this type of fraud requires identifying suspicious activity before a payment is authorized.
Getting Ahead of the Problem
The key to combating payment fraud is identifying high-risk transactions before a customer clicks “Send.” Some financial institutions have already introduced targeted safeguards. JPMorgan Chase, for example, restricts certain Zelle payments to recipients customers first met through social media. But lasting protection requires a more comprehensive approach—one that combines historical transaction data, device intelligence, account activity, and behavioral analytics to identify suspicious patterns in real time.
The rise of AI has further complicated the landscape. Criminals now use generative AI to create highly convincing phishing emails, voice messages, and other communications that are becoming harder for consumers to distinguish from legitimate interactions. As a result, financial institutions are investing in AI-driven fraud detection systems of their own. AI excels at analyzing massive volumes of historical and real-time data, enabling institutions to identify emerging fraud patterns and intervene before losses occur.
Many organizations have also moved beyond one-time verification checks toward continuous monitoring and ongoing risk assessment. Account verification, once largely confined to customer onboarding, is increasingly becoming a continuous process throughout the customer relationship.
“Continuous verification over the lifecycle of an account and transaction is important because you are able to determine that a device changed, and the behaviors have drastically changed,” Sando said. “You have to continuously verify that not only is this who they say they are, but it’s their device, their card, and that it’s typical of what they would normally be doing.”
Robust account verification does more than satisfy regulatory requirements or strengthen fraud prevention programs. It also builds confidence among both financial institutions and their customers that payments are being conducted securely.
In addition, advances in verification technology are reducing rather than increasing friction. Behavioral biometrics, for example, can detect when a customer’s device is being used in an unusual way without requiring any additional action from the legitimate users, improving security while preserving a seamless payment experience.
Regulatory Bodies Step In
Regulation is also reshaping payment verification requirements as governments and regulatory bodies around the world seek to better protect consumers and businesses from fraud.
In October 2025, the Eurozone made Verification of Payee (VoP) mandatory for all payment service providers (PSPs), with the requirement extending to non-euro-area PSPs by July 2027. Under the new rules, PSPs must verify that the payee’s name matches the account information before executing both regular and instant SEPA credit transfers. The UK has adopted a similar framework known as Confirmation of Payee (CoP), designed to reduce the growing incidence of APP fraud.
Similar efforts are underway in the U.S. Nacha’s fraud monitoring requirements, which took effect this year, are among several regulatory initiatives placing greater emphasis on account and payee verification. The rules require originating depository financial institutions and third-party senders to monitor ACH transactions—including Same Day ACH payments—for fraudulent activity.
The direction of these regulatory changes is clear: responsibility for fraud prevention is increasingly shifting toward banks, payment providers, and other financial institutions. Organizations operating in the payments ecosystem must be prepared not only to comply with evolving regulations but also strengthen their overall fraud prevention capabilities.
One of the most encouraging developments is the industry’s growing emphasis on intelligence sharing. Rather than relying solely on isolated fraud controls, financial institutions are collaborating to share trusted data and fraud intelligence across the payments ecosystem. As fraud schemes become more sophisticated, no single organization has complete visibility into emerging threats. Widespread data sharing, combined with AI’s ability to analyze vast datasets, enables institutions to detect patterns that would otherwise remain hidden.
Customer feedback is also becoming an important driver of innovation. FIs are using direct customer insights to better understand evolving fraud tactics and are designing solutions that address these challenges.
“Customer feedback gives FIs a view into the areas of the customer journey that legitimate customers are experiencing unnecessary friction or false positives,” said Sando. “They can highlight inefficiencies or points of failure in fraud controls. This feedback often drives the prioritization of product enhancements, but it also makes sure that any new features will capture the ideal user experience and are trusted by customers.”
These trends are already reflected in the latest generation of fraud prevention solutions. U.S. Bank Account Verification and Global Account Verification help financial institutions reduce payment fraud by verifying account ownership and status before funds are sent. The Account Validation API enables secure verification of personal and business accounts, while Global Account Verification provides real-time validation for accounts in more than 45 countries, supporting both domestic and cross-border payments.
Many of the issues shaping today’s fraud landscape—from the rise of APP fraud and real-time payments to the growing role of AI and account verification—were the focus of a recent webinar hosted by LSEG. The discussion looked at how FIs are adapting their fraud strategies as payment ecosystems become faster, more interconnected, and more difficult to secure. You can watch the on-demand webinar here.