There has been a lot of news about faster and real-time payment products and platforms, but less about how to secure them.
Some in Congress are asking for the Federal Reserve to deliver a real-time payments solution as quickly as possible, but they haven’t recognized that time may be needed to ensure all the right security measures are in place.
The Federal Reserve has created a fraud definitions group earlier this year, and an article in PaymentsSource provides an understanding of the group’s goals and progress to date:
Established by the Federal Reserve last March, the fraud definitions work group is using the mantra of “better data, faster” as it seeks a high-level structure to classify the scope of payments fraud scenarios, said group member Dondi Black, vice president and senior product strategist at FIS.
“It has to be a flexible system, and we don’t have to reinvent the wheel because it is just a matter of studying the information that is available today,” Black said last week when group leaders updated progress during the annual payments symposium in Chicago.
But there is a massive amount of information to dissect and funnel into categories, making the task force’s work critical to establishing a model that would initially provide better security for ACH, wire transfers and checks — and eventually be deployed for faster payments.
In adopting a fraud classification model, the group is hoping to achieve consistency in how each fraud event is defined so that all banks are talking the same security language and can spot trends within their own networks.
This effort to define fraud is expected to take about a year, much less creating the tools to recognize and stop it. What is unclear, at least to some, is what role the Fed will play to stop fraud when it launches the FedNow real-time service.
Several of the banks that have provided comments to the Fed regarding its announced real-time service are wondering the same. By the way, comments regarding the FedNow proposal need to be provided by November 7, 2019.
If you want to look at the responses received thus far, you can take a look here.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group