Technology innovations, regulatory developments, changing customer expectations, emerging fraud attacks—all these and more play a part in shaping the evolution of the payments industry and its supporting ecosystem.
At Visa Acceptance Solutions we work with leading industry analysts to stay ahead of change, and we're ready to share key insights with our customers and partners in a new monthly update. This month, we're highlighting the following recent trends and news items:
- FedNow is live for real-time payments (RTPs)
- Payment software investment trends
- The challenge of balancing frictionless payments and fraud management
- Fighting scams, policy abuse, and friendly (first-party) fraud
1. FedNow is live for real-time payments (RTPs)
U.S. banks and credit unions can sign up to use FedNow, the U.S. Federal Reserve's real-time payment (RTP) system, to make instant payments on behalf of their customers at any time. Instant payments offer consumers and businesses rapid access to funds (such as paychecks or invoice payments) and just-in-time payments that help improve cash flow management. By their nature, RTP systems prioritize speed and convenience, which may come at the expense of certain security measures. Banks will need to monitor evolving fraud trends and protect themselves and their customers against emerging risks. Aaron Press of IDC says: "FedNow has the distinct advantage that its owner is the Federal Reserve Bank of the United States, providing a powerful sense of credibility and neutrality."1
Visa Acceptance Solutions already enables acceptance of payments made using RTP networks around the world, including Pix in Brazil and UPI in India. Reach out to us to learn more.
2. Payment solution investment trends
A Forrester report2 reveals that 85% of global software decision-makers say their organization has adopted, or plans to adopt, a payment solution:
- 23% are currently implementing
- 22% are currently expanding an existing solution
- 12% are planning to implement a payment solution in the next 12 months
What are your organization's investment plans for each of the following retail initiatives over the next 12 months?
In addition, 76% of North American digital business strategy decision-makers say their organization's spend on digital business initiatives will increase over the next 12 months.
When making any investment decision about payment solutions, it's important to consider:
- How it will fit with your existing technology ecosystem
- How it will help you meet your overall business goals
- How well it can adapt and scale to support you into the future
3. Balancing frictionless payments and fraud management
Getting the balance right between frictionless payments and fraud management has long been a challenge for merchants. Too little friction can let too many bad orders go through, while too many fraud prevention steps can generate off-putting friction for genuine customers.
Collecting and sharing high-quality data is critical to getting the best from fraud detection and prevention solutions and is an area where merchant education is still needed, according to Juniper Research3. We agree that data is critical: our enterprise fraud and risk management platform, Cybersource Decision Manager, combines insights from more than 269 billion4 VisaNet transactions with advanced AI to help businesses protect themselves while improving the customer experience.
Juniper additionally recommends that fraud detection and prevention vendors build solutions tailored for SMEs. Cybersource Fraud Management Essentials (FME) is a ready-to-go solution for mid-size enterprises that helps reduce common fraud attacks without adding friction at checkout.
4. Fighting scams, policy abuse, and friendly (first-party) fraud
Forrester's5 2023 data shows that 72% of business and technology professionals working in retail plan to maintain or increase their investment in payment fraud management. But scams, policy abuse, and friendly fraud teeter on the edge of legitimate customer behavior and gaming merchant's policies and systems.
"Scams are present alongside the entire customer journey—including new account registration, login, transactions, and payment."
– Andras Cser, Forrester
In addition to screening transactions for fraud, merchants should consider a specialist solution, like Cybersource Account Takeover Protection, that monitors account events (including registration and login) and blocks fraud at the account level to avoid bad transactions further downstream.
When it comes to friendly fraud, Compelling Evidence 3.0 (CE3.0) allows merchants to leverage qualified transaction data to protect against confirmed first-party misuse—and the associated chargebacks—in card-not-present (CNP) environments. Facilitated through Verifi, a Visa Solution, CE3.0 helps draw a clear, direct relationship between the merchant and the cardholder (using qualified historical transaction data) to systematically establish a legitimate purchase.
As it seems unlikely that friendly fraud will ever go away, merchants should look into making CE3.0 part of their longer-term fraud management strategy.
We'd love to talk
Feel free to reach out and discover how Visa Acceptance Solutions and our uniquely open payments platform can help you build the future of payments. And keep an eye out for next month’s update for more news and commentary.