Next week the financial world turns its focus to real-time payments via the NACHA show, held virtually from the 22nd to the 25th. The agenda, as well as the general discussion around real-time payments, has moved past its COVID acceleration phenomenon to the more subtle points of the technology such as fraud, messaging and cash flow management. Although those features still play second fiddle to real-time payments’ main selling point — speed – they are no less urgent as consumers and businesses demand it and banks upgrade their legacy systems to provide it.
“When it comes to real-time payments, I like to think that we need to make speed safe,” said Jessica Cheney, vice president of product management and strategic solutions for Bottomline. “I think that there’s just a general urgency in the lack of digital processes in authentication today, especially with the shift to more digitized payments due to COVID. So, a lot of places really reduced their checks back over the past year, and plan to continue doing that. But they’ve often not added digital-first authentication and fraud prevention processes into their mix. Until they do so, they won’t be ready for real-time payments.”
Cheney, along with Risk and Fraud Prevention Officer Chris Gerda, will host a session that focuses on some of those “make speed safe” collateral issues around real-time payments titled “Gaining A Holistic View of Security and Risk Across the Payment and Cash Lifecycle.” On a high level, the session will focus on what the two executives believe are missing opportunities to optimize both cash flow (speed) and security (safety). As Gerda said, financial managers focus on cash optimization, liquidity, working capital and treasury management. Fraud investigators seek visibility across the entire cycle from payment origination to completed transaction. Those two missions do not have to be separate as banks can develop best practices and lessons learned to promote collaboration instead of silos, and in the process maintain secure and efficient payment and cash management for their organizations.
“Banks need to think this through,” Gerda counseled. “They need to identify the actual fraud schemes that are targeting businesses today and be honest about the vulnerabilities in their entire payment ecosystem from the payment to the invoice to the communication in the context of real-time payments.”
Cheney knows this holistic approach will require a shift in thinking. The first shift is discarding the myth that real-time payments are harder to secure than other payment methods. She aims to dispel this potential fear factor in using real-time payments by using the session to detail ways that technology partners can provide their clients with the communication mechanisms to authenticate secured relationships. She urges banks to think in terms of secured relationships, rather than secured payments, that will provide the mind shift necessary to go forward with real-time payments and futureproof it in the process.
“It’s one of those things that people in the industry believe without actual evidence,” she noted. “Because real-time payments are so fast it can’t be secure. That’s just not true. So is the thinking around ‘irrevocable’ payments. From a security perspective, nobody wants to be responsible for making a fraudulent payment faster. I would even go so far as to say real-time payments can be more secure than ACH. With real-time payments, you have all of this other information within the payment, and you have request for payment. That allows you to secure even more of the communication that fraudsters are trying to compromise.”
The session kicks off at Payments.NACHA.org at 3:10 pm Monday, August 23.
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