Another article appeared that decries the current slowness of payments in the U.S. and admonishes the industry for not moving quickly enough. The particular article in Business Insider sings the same old song as it reports on recent survey results:
More than half (59%) of payments stakeholders don’t believe the US market is making enough progress toward implementing faster payments, per a report from the US Faster Payments Council (FPC) that polled payments stakeholders including financial institutions (FI), processors, payment network operators, business end-users, acquirers, and fintechs.
What’s the rush? As I recall, the U.S. was similarly admonished for not having adopted EMV technology soon enough. When fraud attacks created a panicked rush for EMV issuance and updated terminals, the result was nothing less than a fiasco.
Why not take a deliberate approach to faster payments that also considers having the right fraud mitigation tools in place as well? Let’s learn from the examples of other countries that have gone before us, including the UK:
Thirty percent of respondents said that their organization isn’t set up to handle risk in a real-time environment yet. Faster payments limit the amount of time payments can be analyzed for fraud, potential mistakes, and other issues, prior to their completion. This means that stakeholders may need new solutions to combat these problems in a fast manner, and many don’t feel they’re prepared to do so yet.
UK Parliament’s Treasury Select Committee has made a recommendation to slow down first-time payments between accounts, potentially limiting fraud and other issues. The recommendation suggests that the first transaction be delayed for 24 hours, with subsequent payments proceeding at regular speed. If the US were to adopt a similar policy, payments players may worry less about handling faster payments’ risks themselves.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group