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.

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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.