The Simility Blog

Enable Faster Payments with Adaptive Decisioning
Rahul Pangam
Rahul Pangam
September 18, 2018

Unlike traditional payments, faster payments need time-sensitive multi-layered intelligence for real-time fraud prevention

The payment industry is exploding with change. It is evolving to keep pace with the growing customer expectations of secure yet real-time, agile and frictionless payment services. Regulations such as the revised payments services directive (PSD2) and the new payments platforms (NPP) are prodding financial institutions to offer innovative services and products. Then there is also the pressure from governments, central banks and industry associations to implement faster payments with an aim to modernize the existing payment processing systems and compete with non-banks.

As a result, a range of real time payment methods such as credit cards, digital wallets, wire transfer payments, peer-to-peer payment platforms, cryptocurrencies, and so on, are now being widely used.

Blink, And You Miss Fraud

Increasing digitalization has made businesses more vulnerable to fraud. And, with a scarcity of robust solutions that allow time-sensitive authentication, faster payments stand out as a soft target for fraud. According to a recent study, 78% organizations experienced attempted and/or actual payments frauds through credit cards, business email compromise, and other malicious techniques in 2017.

While faster payments provide customers with the convenience of instant transactions, they are a happy hunting ground for fraudsters as well; with fraud likely to snowball into much bigger proportions.

In the traditional payments, banks and other payment service providers (PSPs) had the time to authenticate transactions and detect suspicious activity such as account takeover attempts. They could also spot anomalous customer behavior to detect attempted synthetic fraud. But, with instant payments, banks and PSPs are left with no time in hand for authentication, giving fraudsters ample opportunities to siphon off money and disappear quickly.

Popular Approaches

Instant payments provide a great value proposition when it comes to mobile payments for POS applications and P2P payments. Therefore, to extend faster payments with minimum customer friction, businesses are deploying various approaches to stay relevant in the changing commercial dynamics.

Same day ACH: ACH or direct debit from account poses a serious headache for banks as customer details are scattered across unsecured locations such as ecommerce websites, P2P platforms, digital wallets and so on. However, in the absence of robust solutions to effectively fight ACH frauds, banks choose to write-off these losses as cost of doing business.

Tokenization: Another method that has proven successful in preventing in-store and online payments is tokenization. Since tokens substitute data elements with non-exploitable entities, they adequately address customer concerns of sharing their bank account details. Whenever a payment is initiated, the tokenization system generates a token that can be used only once. A new transaction will require using a new token. This reduces the risk of fraudsters accessing live customer data. Many payment systems are adopting tokenization to arrest account-based fraud and deliver secure, faster payment services. That said, tokenization should not be considered the silver bullet. It is one part of the greater security mechanism that payment systems need to adopt.

Multi-factor authentication: One of the most secure methods of validating a transaction, currently, is multi-factor authentication.  Even if a fraudster manages to decode a customer’s login information, he/she will still need a one-time code to initiate a transaction or transfer funds. Due to layered authentication from multiple categories of credentials known only to a customer, the chances of fraudulent access to customer data are minimized.

Act Now, Else Face Losses

Faster payments is a moving target that makes banks and PSPs vulnerable to fraud. Common authentication mechanisms such as one-time pass codes or more complex passwords are still inadequate to arrest fraud emanating from faster payments. In fact, many banks have deferred the rollout of faster payments infrastructure due to lack of adequate measures to control and prevent fraud. However, this means they will likely lose their customers and revenue to competition such as the emerging non-banking providers.

Enter Simility For Secure, Friction-Free Faster Payments

With its best-in-class Advanced Decisioning Platform, Simility helps businesses strike a balance between secure, faster payments and friction-free customer experience. This omnichannel platform provides a consolidated, real-time transaction intelligence to help businesses minimize fraud while reducing authentication friction, in compliance with the regulatory requirements.

Similty’s platform enables businesses to derive actionable intelligence by correlating data spanning channels — historical, behavioral and device — with other data including online, voice, device, and third-party feeds. Using this layered intelligence and leveraging behavioral analytics, artificial intelligence and machine learning — supervised and unsupervised — businesses can proactively identify suspicious transactions.

In addition, businesses can leverage visualization, grouping, and fuzzy matching with embedded, closed-loop feedback on every decision. Coupled with the ability to define and tweak rules, businesses can future-proof their fraud prevention investments on faster payments.

To learn how Simility can empower your business to ride the faster payments wave while proactively blocking fraud, schedule a demo or contact us now.