The Federal Reserve’s Plot for Safer— and not just Faster Payments
July’s publication of Chapter Two of the Final Report on Faster Payments Task Force that cogitated that payments should get more real-time by 2020 sent the industry back to the drawing board. But with the September edition response to statements from the Federal Reserve, more solutions to have come forward, and are already in implementation.
The rising nationwide concern on payment security matters and financial services—fueled majorly by the Equifax breach—is now presenting a decisive and critical second opportunity for Fed’s to advocate for faster payments in the now fraudulent world of digital transactions.
The Feds, in their final report to the retired FTPF (Faster Payments Task Force) provide recommendations and clues on how they can better the payments processing platform.
Fed’s Logical Move
It is clear that most U.S. transaction fraud result from credit/debit cards. EMV, though arriving late in United States, will deal with some of the counterfeit fraud cases. But the insidious threat remains unattended to since much crucial card-account info are still easily accessible by hackers— even with the chip technology. Though tokenization may help, many still see end-to-end encryption as the best remedy to this problem.
Surprisingly, most banks and networks in the United States are still silent on the matter of encryption— or are probably opposed to it because of the extra costs it will bring upon them. Instead, they have seemingly shifted focus to protecting themselves from those who criticize their risky payment modes. Infact, network brands and banking institutions are working hard to steer talks away from the fact that there’s urgent need for external interventions—more so by the Fed.
It’s no wonder security and faster payment reports only hint a few sources of these problems while hiding factual data on payment card fraud from the public just like the Legacy providers do with fraud information from wires and the Automated Clearing House.
So, if these card issuers and network brands refuse to share their data, Fed’s next logical move is to perform a wide-ranging study to assess the state of fraud in the nation as compared to the whole world and find out what solutions may move the state closer to addressing the problem.
Fed’s logical step number two is to clearly define already-known problem areas (like, account take over and ATM skimming), and mull over what can be done to fix them.
Electronic payments expert, Blair Thomas, co-founded eMerchantBroker in 2010. His passions include writing/producing music, and travel. eMerchantBroker is America’s No.1 Faster Payments company, serving both traditional and high-risk merchants.