Same Day ACH: Don’t Let It Become a Fraudster’s Casino Game

​Since the first time I blogged on Faster Payments and SEPA in the EU, a lot has changed globally – the trend of faster payments, with settlements in seconds, or on the same day, is no longer just a vision. Faster Payments in the UK and Australia, SPEI in Mexico, and G3 in Singapore, are just a few of the approaches to getting money into people’s hands more quickly. One of the newest of these global endeavors in speeding up payments is “Same Day ACH,” now prevalent in the United States.

It is really mind boggling to think about how nearly 13,000 financial institutions, managing 22 billion electronic ACH transactions a year, representing about $40 trillion, are moving this massive quantity of information and money at settlement speeds only a combination of equally impressive technology and business transformation can make possible. Even more important, banks, consumers, credit unions, government entities, and solution providers, will all benefit as payment speeds continue to improve and the process matures.

So, while all this sounds like great news – unfortunately, fraud is anticipated to surely follow this increased speed. As a UK-based fraud management executive back in the early days of Faster Payments, I witnessed that fraudsters treated the online banking portal like a casino game, making attempt after attempt until they lost “the game” or hit “the jackpot”. Fortunately, we have moved on since that 2008 UK Faster Payments launch. But now mobile and other new digital channels are upping the stakes in fraud with a cyber, breach-prone environment that is our collective global reality.

Same Day ACH is certainly not the only “game in town.” Fiserv’s Popmoney, FIS​ PayNet, clearXchange​, PayPal, Square Cash​, along with Visa and MasterCard, are just a few of the financial products that will someday benefit from Same Day ACH. But all of these money movement methods certainly will have the fraud bar raised on them further when Same Day ACH reaches its peak.

Here are some Faster Payments concerns to consider as you develop a fraud-proofed “Same Day ACH” strategy:

  • Money settlement will occur in two hours and not two days – any manual processes used today for risk and fraud will need automation.
  • The ability to interdict and interact when money moves will be critical – real time delay, decline, approve, and challenge stages all mean that newer tools will be needed in order to addressed a faster-paced environment.
  • Unlike credit cards that have limits and debit cards with daily limits, the ACH is the window to the customer’s prime checking account – scoring events to mitigate fraud risk must be completed in real time and at the customer level to offer protection against fraudster access.
  • Multiple inter-day settlements will occur, morning, afternoon and end-of-day – balancing your risk and fraud operations support around these cut offs will be critical.​
The first phase of Same Day ACH may not launch until later in 2016, but now is the time for financial institutions to examine risk and fraud management policies, get analytics and technologies in place to fight the latest and faster forms of fraud, and prepare specific plans to address the unique elements of Same Day ACH. Payroll, bill payments, invoices, and account transfers will all need their own gap analysis of the need to support speed. Establish new business practices now – well ahead of the event – that is almost the easy part. We must also work together as an industry to foster an open and transparent dialogue in order to ensure that payments are not only faster, but also markedly safer for both our institutions and our customers.

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