Federal Reserve to mitigate fraud for faster payments

In 2017, the Fed will issue a report designed to help the financial services industry identify what technology gaps still need to be filled to make faster payments a reality. Financial fraud expert Avivah Litan, an analyst at the consultancy Gartner, said faster payments opens up all kinds of opportunities for fraudulent payments that must be addressed upfront, instead of trying to bake security back in after deployment. The proposals for how to achieve faster payments, Litan says it should be very clear on the principles that must be followed to ensure strong security and fraud prevention.

Paul Wilson, product manager at security firm Easy Solutions, which is a member of the task force, said whatever technologies ultimately are used to support faster payments must support banks abilities to detect and limit fraud. He added that once payments move to a real-time environment, banks and credit unions will have to perform real-time fraud checks before payments are submitted.

The task force is likely to establish a security code of conduct similar to the code defined by the United Kingdoms Faster Payments Service, a banking initiative to reduce payment times between different banks customer accounts from days to hours. That code would outline the controls banks have to implement on their own payments systems and gateways, along with giving guidance and rules that the financial institutions must follow to protect their end-customers.