The financial services industry has worked for years to create frictionless payments. Now it may be necessary to add friction back into the mix to combat fraud.
“Instant payments actually has a lot more fraud connected,” Jenny Winther, head of payment schemes at Sweden-based Handelsbanken, said today during Volante’s “From mandates to modernization: Payment as a Service strategies for European banks” webinar. The speed of payments attracts fraudsters, she said.
According to technology solutions provider Cognizant, with adoption of instant payments growing, scams also are on the rise. In 2023 consumers lost over $10 billion to fraud and by 2027, fraud and financial crime is expected to cost financial institutions across the globe more than $40 billion annually.
“We are probably coming to a point where we must look a bit more at frictioned payments,” she said, noting that added friction in payments could include the following:
- Time delays on transactions;
- Augmenting the amount one can send in a single payment; and
- Requiring additional recipients be added to a client’s list of trusted recipients a day in advance of a transaction.
“There’s a lot of ongoing actions there to think of how to do this now to combat fraud,” Winther said.
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