Faster Smarter Payments in Nashville was the first really large conference I attended since the pandemic began, even though I have been to two smaller conferences earlier this year in Frankfurt and Stockholm. To say it felt good to be back on the road and see so many people would be an understatement. The conference was packed with a great lineup of talks and speakers, but given that 4-6 talks were being held at any given time, I had to really figure out what was most relevant for me.
In contrast to previous years, I don’t think there was anyone questioning whether faster or real-time payments were here to stay. Maybe this is because both Same Day ACH and The Clearing House’s RTP both recently increased their transaction value limits, maybe it’s because The Fed’s FedNow is slated to go live in 2023, or maybe it’s a combination of these factors. Regardless of the cause, this is a very positive sign for the US market moving forward.
My experience (after the obligatory flight delay, missed connecting flight, and very late arrival Saturday night) began Sunday afternoon with Anthony Serio’s talk on the importance of returns in the ACH space. Given the prevalence of third-party providers (TPPs) offering payments both now and their very likely growth moving forward, this talk was very timely. Fintechs, which often lack the very specialized payments knowledge needed to navigate Nacha’s payment rules, can highly benefit from partnerships– whether on the banking side or from their connectivity provider.
As these providers move from the batch or same-day space to real-time, the importance of having specialized staff and documented processes to deal with exceptions handling and the ever-growing risk of fraud will only grow in importance. Anthony also highlighted the need to build a strong relationship with banking partners and connectivity providers. This requires all parties to understand the other’s goals, strengths, and weaknesses, and to trust that all partners have the processes and personnel in place to execute on their side of the transaction.
I spoke on Monday morning about what infrastructure operators, financial institutions (FIs), regulators, and scheme owners can learn from the experience in other markets regarding fraud in faster payments systems. Given the recent news about fraud in mobile payment apps in the US, this topic was, unfortunately, of high interest. I argued that the US payments community needs to work together to combat fraud and overcome fears that information-sharing could lead to competitive disadvantages because fraud is not in anyone’s interest and should not be seen from a competitive perspective.
While neither of the faster payment system operators in the US currently offer a centralized fraud detection or money mule tracking capability, this is something that should at least be discussed. Infrastructure operators are best placed to evaluate the likelihood of fraud from both the sending and receiving FIs and, at the very least, can help alert FIs when there is suspicious activity.
Lastly, government regulators and scheme owners can encourage information sharing via changes in laws and regulations as well as rules to enable investigations before funds are made available to suspected fraudsters. These changes, combined with enhanced data utilization by FIs, can solve many different types of fraud prevalent today, though by no means will all of these recommendations eliminate fraud.
Other session topics such as the future role of Central Bank Digital Currencies (CBDCs), the evolution of bill pay, and banking cannabis meant that there were no shortage of informative talks to be had when one wasn’t roaming the exhibition hall and bumping into old friends.
Overall, Nacha’s Smarter Faster Payments was a great conference to attend and hopefully a sign for the future that, while we’ll never completely go back to how things used to be (Zoom meetings, anyone?), a modicum of normality has returned.
Get in touch if you’re interested in learning how our expertise can improve your business.
R. Andrew Gómez
Andrew is a managing consultant at Lipis Advisors and leads custom consulting projects on topics such as payments fraud, ACH modernization and benchmarking, and mobile payment adoption. Andrew oversees Lipis Advisors’ database and the collection, collation, and analysis of statistics of more than 100 payment systems.