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FedNow Instant Payments Will Not Prevent Fraud

Monica Eaton-Cardone’s Latest Guest Feature for Treasury & Risk

Chargebacks911® COO Monica Eaton-Cardone reveals in a new guest post for Treasury & Risk that, while instant payments present opportunities for business, they won’t solve all the market’s problems. In fact, they may present new and previously-undetected vulnerabilities.

Treasury & Risk provides high-level finance executives with the strategic content and critical information they need to keep their businesses moving in the right direction. The outlet serves as a trusted source of thought leadership on regulatory changes, economic trends, best practices, corporate success stories, and tactical solutions.

Under the preexisting system, we conduct interbank payments using the automated clearinghouse (ACH) system. ACH clearing involves significant back-and-forth reconciliation of multiple different records. This slows down the process and, in turn, opens the door for errors in the reconciliation process.

The FedNow service combines real-time gross settlement (RTGS) and integrated payments clearing. The new system will help us catch up to advancements being made globally in payments technology. However, fraudsters are clever and adaptable; they can move quickly to take advantage of new processes and procedures. As Monica explains in the post, this could spell trouble as we move into an instant payments system.