Payments & Transactions

Instant payments more mainstream than ever, but at what cost?

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It’s no secret that mobile banking and cashless payments have become engrained in everyday life. We’re now routinely accessing our bank accounts, making deposits, checking balances and paying friends and family using our mobile devices. In fact, the World Payments Report 2017 study from consulting firm Capgemini and BNP Paribas states that digital payments worldwide will see an increase of almost 11 percent through the year 2020. Further, a staggering 726 billion mobile transactions globally are anticipated by 2020 as well. Paying with your mobile is rapidly moving towards becoming the new cash and in the process, replacing traditional credit and debit cards. As these numbers are trending upward, the mobile payments and transaction industry, which one of its main selling points is simplicity, is ripe for fraud and criminal activity. Enter the mobile fraud detection and prevention industry.

Convenience, at a cost

Collectively and as individuals we ask a recurring question – what kind of personal privacy and financial security are we willing to risk and sacrifice for the ultimate convenience of our mobile devices? For instance, a new trend in mobile P2P payments are instant access to funds. We’ve advanced far enough in person to person cashless payment where the previous one to three day waiting period to access funds is now passé. Banking consumers want instant access to their funds – the sooner, the better. In today’s competitive consumer banking world, each player is looking for a competitive edge to gain new customers and retaining existing ones. One way to accomplish that is instant access to your funds.

In another study,  the UK consulting firm Ovum, forecasts that cashless payment tools will reduce traditional credit and debit card payments in Europe by 37 percent by 2027, and instant payments will overtake traditional cards by 2025 in usage. The cash and plastic in our wallets may soon be replaced by one or two P2P payment apps, like Zelle. Immediate access opens the door to fraud, while leaving banking customers and banks themselves on the hook for disappearing checking or savings account balances.

Investing in mobile payment security to fight cybercrime

What are financial institutions doing to prevent the potential loss in billions due to fraudulent banking transfers in cashless payments?

One answer is these organizations are making capital investments into fraud prevention and protection systems to stop it before it begins. For instance, SIBS International, one of the largest electronic payments providers in Europe and Africa, has partnered with IBM to provide a comprehensive real-time cognitive anti-fraud protection solution that will protect their customers and root-out suspicious activity and to shut them down before it begins. Using IBM’s vast cognitive experience and specifically their Counter Fraud for Safer Payments platform, this machine learning-enabled solution constantly monitors millions of payments in real time. It identifies suspicious activity and trends that would possibly lead to a fraudulent transaction (i.e. a single mobile transaction on another continent), where a financial institution can temporary disable that bank account and in turn save both bank and customer their funds.

Having a fraud detection system in place gives institutions the power and knowledge to improve the integrity of transactions during the payment process, while giving their customers the confidence to know that their funds and the transactions that involve them will be carried out securely.

Embracing our cashless payment future

As someone famous once said, “With great power comes great responsibility” – and the cashless payments industry is no exception. Looking for the utmost in convenience with cashless payments, skipping the waiting period and getting instant access to funds requires a certain level of responsibility for the consumer and the bank to protect these funds from fraud. Having this power requires a cognitive system to protect it. IBM’s Counter Fraud Management for Safer Payments platform gives financial institutions these cognitive tools to both identify and prevent, proactively and reactively, the increasing fraud in the cashless payment world.

Read more about IBM Counter Fraud Management for Safer Payments here.
To learn more about IBM Banking solutions, please visit us here.

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