Despite popular belief, faster payments don’t always mean more fraud when the payments are closely monitored. The rise of instant payments where funds can be available within ten seconds of a payment order being made, has caused wide speculation on fraud AP vulnerability. As a result, many small business owners are worried about initially adopting instant payments and other technology.
“There’s certainly a buzz in the air,” said Pradheep Sampath, CPO at Entersekt, in an interview with PYMNTS. “But faster payments mean that we also need to be on the ball [to] mitigate and manage risk faster, too.” Here are three ways quicker payments help reduce fraud:
1. P2P payment apps have an extra level of security
When using popular payment apps like Venmo, CashApp, and Zelle payments can’t be canceled once they’re sent – even if they’re shipped to the wrong person. Venmo does offer purchase protection where you avoid losing money for unauthorized transactions. You must pay 1.9% of the transaction fee to activate purchase protection on the app.
Since these apps are successful and integrated into mainstream society, many business owners in the B2B space are working on a similar concept that once your payment is sent you can’t “claw it back,” according to PYMNTS. To accomplish this, there must be higher levels of security with the issuing bank between the two parties.
2. Development of proximity-based authentication
Proximity-based authentication allows for more secure payments because it automatically logs people in or out of their devices based on distance. That way, you can ensure a real person on the other end receives your payment instead of an imposter in another country. It also requires the user to have a secondary device near the primary device to successfully authenticate a transaction.
3. Implementation of Know Your Customer standards
Know Your Customer (KYC) are guidelines and regulations that require professionals to verify their identity, customer suitability, and risks when in a working B2B relationship. Many business owners manage risk by creating scores using multiple data providers. Basically, you’ll want to ensure all customers you’re doing business with are recognizable, using a familiar device and IP address, and using a payment channel they’ve used before.
If you need further advice and insight or are interested in adopting real-time payments, book a free consultation session by visiting my website or calling 617.843.5700. I look forward to working with you and getting you more comfortable with new technology in the B2B space!
