As real-time payments technologies continue to gain momentum, more concerns are being raised about the increased risk of payments fraud. Traditional payment mechanisms settle in the same day or over a period of days after payments are sent from treasury or ERP platforms. However, with real-time payments that clear instantaneously, once the payment is sent, the funds are immediately transferred out of bank accounts and remitted to the beneficiary in real-time.
While there are many benefits for instant B2B payments, the drawback is that the ability to claw back unauthorized or fraudulent payments after they are sent is increasingly difficult, if not impossible. While transaction limits for instant payments initially started as low as $25,000 USD, limits are increasing so that instant payment systems are competitive with other faster payment counterparts. For example, NACHA Same Day ACH in the United States recently proposed increases of up to $1 million USD.
The increase in limits similarly increases the CFOs’ risk exposure, meaning that finance teams must double or triple check outgoing instant payments to ensure they are correct. In concept this is a great solution. However, the challenge is that for most enterprises the volume of payments and data to “doublecheck” is beyond the ability for a person to verify all aspects of the payment for internal compliance and accuracy. For example, a mid-sized organization that remits 100 payments in a single payment run would require 2-3 minutes of extra verification per payment, adding up to five hours of additional processing time for the entire batch. For a process that begins early in the morning and only needs to be sent by mid-afternoon, the timing is acceptable. Unfortunately, most AP runs have more than 100 payments. And, if talking about real-time payments, the process becomes anything but instant.
Technology can alleviate the burden.
Fortunately, these and many more scenarios can be fully automated within the payment journey’s digital workflow.
Instant payments offer a tremendous amount of benefit for organizations looking to expedite the delivery of domestic and – in the near future – cross-border payments. CFOs are increasingly interested, for good reason.
To ensure a safe instant payment journey, CIOs and CFOs are demanding real-time payment governance to combat the increased risk of payments fraud for instant payments. These best practice controls are best applied to all corporate payments, including real-time payments. This delivers a consistent defense against payments fraud, eliminating opportunities for fraudsters to exploit weak points and steal corporate money. With CFOs reporting 40% increases in payments fraud attempts in the past year alone, any technology that increases resilience is a win for CFOs and internal governance.
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