As instant payments continue gaining momentum globally, concerns over fraud present a critical challenge. However, Reed Luhtanen, executive director of the US Faster Payments Council (USFPC), urges the financial sector to address fraud pragmatically while ensuring these concerns don’t delay progress.
The Fraud Debate
Fraud in instant payments, while concerning, has been “vanishingly rare” in the US and other global markets with wider use cases, according to Luhtanen. He emphasizes that while it’s essential to tackle vulnerabilities, fear of fraud shouldn’t prevent the adoption of transformative payment systems.
“Yes, that is something we need to tackle and understand and have a good plan for,” says Luhtanen. “But it also shouldn’t be the thing that makes us not move forward.”
Implementation Strategies
Luhtanen offers a straightforward approach for financial institutions adopting instant payment solutions:
- Start with Strategy: Focus on better serving existing customers and attracting new ones.
- Identify Partnerships: Find the right collaborators before moving to project planning and execution.
This method addresses common pitfalls, including the urgency to adopt new trends without sufficient planning. Organizations like the USFPC also offer resources, such as a supplier catalogue, to support institutions in implementation.
Balancing Trust and Uncertainty
Luhtanen highlights a dual challenge in building trust while managing uncertainty around issues such as error resolution, fraud, and loss allocation. Institutions need to develop preventative and reactive safety measures without letting fear dictate progress.
“Everybody needs to understand […] how are losses allocated, how are errors resolved when there is fraud,” he explains.
Conclusion
While fraud in instant payments is a valid concern, Luhtanen believes embracing both optimism and preparedness is key to accelerating progress. Prioritizing discussions on safety, trust, and innovation will ensure secure and effective adoption of instant payment systems across markets.