Rising Demands for Mobile P2P WHAT's INSIDE FEATURE STORY NEWS & TRENDS

Feature Story FIs on catering to older generations’ growing mobile P2P needs – p. 7

News & Trends PayPal taps RTP to support instant transfers between Venmo, bank accounts – p. 11

Deep Dive The advantages and risks of real-time push payments – p. 15

SEPTEMBER 2019

MEETING OLDER GENERATIONS’ Rising Demands For Mobile P2P WHAT'S INSIDE FEATURE STORY NEWS & TRENDS

Financial services providers Kristy Brandon, Comerica Recent faster payments compete to provide SMBs Bank’s senior vice president headlines, including how with quicker settlements and of eBanking, explains the Southwest Airlines came to consumers with rapid mobile growing demand for rapid P2P accept Apple Pay and J.P. payments payments among Generation X Morgan’s announcement and baby boomer consumers of same-day settlement for credit card payments 03 07 11

DEEP DIVE SCORECARD ABOUT

An in-depth exploration of The results are in. See the Information on PYMNTS.com how push payments speed top scorers and a provider and Fiserv transactions, and the risks directory featuring 55 players and benefits of using them for in the space, including four real-time payments additions 15 17 47

Table of CONTENTS The Faster Payments Tracker is powered by Fiserv, and PYMNTS is grateful for the company’s support and insight. PYMNTS.com retains full editorial control over the following findings, methodology and data analysis.

Slow payments hit micro- and small businesses es- The September Faster Payments Tracker examines new pecially hard as they tend to have fewer resources efforts to serve SMBs with quicker transfers as well as and smaller financial buffers than their larger counter- other recent developments from around the space. parts, making cash flow monitoring critical for survival. Financial services providers have taken note and are AROUND THE FASTER increasingly competing to win customers by targeting PAYMENTS WORLD slow settlement pain points. SMBs in Nigeria can more quickly receive customers’ payments thanks to the Nigerian branch of Financial firms around the world are working to provide pan-African banking group Ecobank, which offers a small and medium-sized businesses (SMBs) with rap- digital payments and collection service that enables id access to funds, and digital and challenger banks customers to make QR code and unstructured supple- are partnering with technology providers to trim settle- mentary service data (USSD)-based mobile payments ment timelines for point-of-sale (POS) payments from in retail stores. Merchants instantly receive revenues two- to four-day waits to next-working-day availabili- from these transactions. Ecobank recently announced ty. Legacy banks are also joining the faster-settlement that the service, EcobankPay, has processed a total of pursuit, working to get ahead of competing FinTechs by 1 billion NGN ($2.75 million USD) in payments since its offering no-fee same-day credit card deposits, for ex- February debut. ample, while other players take aim at accelerating SMB transactions for cross-border business-to-business Airlines are also seeking to give customers options (B2B) payments. Forthcoming solutions intend to sup- for making fast mobile payments. Southwest Airlines port faster, smoother fund transfers between vendors recently signed an agreement with two payments com- in different regions to elevate business payment expe- panies that will allow it to accept Apple Pay. Customers riences, keep cash flows moving and maintain strong will be able to use the mobile wallet to purchase tick- relationships. ets and other services. Christopher Priebe, Southwest’s

director of treasury, payments and risk, said the move SERVING GENERATION X, BABY is important to keeping the airline current with the lat- BOOMERS’ RISING DEMANDS est payment trends. FOR FASTER P2P PAYMENTS Studies show that middle-aged and older consumer Demand for mobile payments is not limited to groups increasingly demand P2P services as more of consumer-to-business (C2B) transactions, especially them now own smartphones. For this month’s Feature as consumers increasingly use their smartphones to Story (p. 7), PYMNTS spoke with Kristy Brandon, se- send money to their peers. PayPal is looking to keep nior vice president of eBanking at Comerica Bank, those consumers on its person-to-person (P2P) pay- about what is driving the high uptake of such services ments app, Venmo, by offering new capabilities, such among Generation X and baby boomer customers at as instant transfers to bank accounts. This feature the bank, as well as what it takes to keep instant P2P will utilize The Clearing House’s (TCH’s) Real-Time transactions secure and easy to use. Payments (RTP) rail and cost users a 1 percent fee based on the transaction value.

To learn more about these stories and other faster payments headlines, check out the Tracker’s News and Trends section (p. 11).

DEEP DIVE: THE BENEFITS AND INSIGHT CHALLENGES OF REAL-TIME PUSH PAYMENTS Push payments, which see payers telling their banks to move funds from their accounts into those of their recipients, are often seen as more secure than pull What should insurance companies keep in payments because they do not require the former to mind as they strive to accelerate their claims reveal bank account numbers or other sensitive data. Real-time payment systems tend to permit only push and payouts processes? How important are payments because of the perceived lower risk, but faster insurance disbursements? that does not mean these options are without issues. This month’s Deep Dive (p. 15) examines the benefits “We have entered a time in which fast, digital and of using push payments in faster payment solutions, real-time payments are becoming the norm. Money as well as the challenges and security needs that can move quickly and digitally, whether you’re paying must be met. your rent, your Uber driver or a friend. Insurance disbursements can no longer be an exception; there is a time-sensitive component to many of these payments THE LATEST UPDATES TO that heightens their urgency and, frankly, customers

THE PROVIDER DIRECTORY INSIDE WHAT'S expect speed. Insurance companies are responding The month’s Faster Payments Tracker profiles 55 [by] implementing changes and new technologies to players in the space, including four additions: Briisk, expedite claims processing and ultimately drive cus- Curve, Nubank and SatoshiPay. tomer satisfaction.

It’s critical that insurance companies don’t overlook the actual payout — the payment is the final key step in the claims process. It’s ultimately what customers are looking for, and thus it will leave a lasting impact.

The good news for insurance companies is that payments technology has advanced significantly. From a cost perspective, competitive payment technologies and rails have led to more choice, thereby allowing for per-transaction cost savings. Feature-rich vendor solutions enable insurance providers to outsource much of the process, and customer comfort with digital payments translates to fast adoption.”

TAMMI SHAPIRO INSIDE WHAT'S vice president of electronic payments product strategy at Fiserv

40M 70% Number of active Venmo Share of transactions that WHAT'S INSIDE WHAT'S accounts Saudi Arabia intends to make digital by 2030

10M 5 Number of Japanese Seconds it takes for consumers who use Indian funds to be credited mobile payments company to recipients’ accounts Paytm’s PayPay app under the Dutch Instant Payment system

MEETING OLDER GENERATIONS’ Rising Demands For Mobile P2P

Mobile P2P payments have long been considered the It may thus be no surprise that a Q4 2018 survey domain of millennials, but these 25- to 34-year-olds found more than half of first-time P2P service us- are not the only generation embracing this technology. ers were at least 45 years old. FIs are seeing these FIs looking to cater to older demographics may find trends firsthand as they work to serve customers of the time is ripe to bring P2P to Generation X (those all demographics. PYMNTS recently caught up with aged 43 to 54) and baby boomer (aged 55 to 73) con- Kristy Brandon, senior vice president of eBanking at sumers, critical bases for many banks. American Dallas-based Comerica Bank, on serving this bur- Bankers Association research shows that adults over geoning group. The FI reports about $72 billion in the age of 50 were responsible for 70 percent of de- assets and serves a customer base that includes a posits made in the U.S. and owned 61 percent of bank larger share of individuals aged 45 and up compared accounts in 2017. to its peers, Brandon said. Comerica partnered with financial services technology provider Fiserv in spring Technology use has been rising outside the millenni- 2018, enabling it to offer Zelle through its mobile al age group, meaning that financial institutions (FIs) banking app. The solution’s popularity has since ris- can increasingly expect middle-aged and older con- en among customers. sumers to be ready and able to take advantage of mobile services. A survey conducted earlier this year “Our 55 and older customers are very active in Zelle,” found that 53 percent of U.S. adults age 65 and old- Brandon said. “The fact that we’ve had such great er own smartphones — a significant jump over the 42 adoption shows how, for something like Zelle, it percent who owned them in 2016 and the 18 percent doesn’t matter what your demographic is — everyone who did in 2013. The 2019 numbers for those aged has a need.” 50 to 64 and those 30 to 49 were 79 percent and 92 percent, respectively. The latter group had only slight- APPEALING TO GEN X AND BABY ly smaller ownership than the 96 percent of 18- to BOOMERS 29-year-olds who own smartphones. Gen X and baby boomer consumers demonstrate some different P2P payment uses than millennials,

8 | © 2019 PYMNTS.com All Rights Reserved with many using these services to quickly send mon- SECURING P2P SERVICES ey as graduation or birthday gifts and to children in Meeting customers’ desires for security while also college to pay for textbooks, Brandon said. These con- providing smooth experiences requires careful sumers are also likely to want their banks to provide measures. Comerica relies on authentication and P2P offerings and are less likely to turn to FinTechs for suspicious activity procedures to help ensure that le- FEATURE STORY FEATURE such tools. Brandon explained that FI-based P2P pay- gitimate customers are logging into the bank’s app or ment options streamline access, meaning customers website and that abnormal transactions are not being do not need to remember multiple logins. made. Securing real-time payments requires provid- Customers also often feel more secure using ing real-time fraud monitoring, and Comerica uses a bank-offered payment services, as such tools have Fiserv solution to analyze transactions, assign risk demonstrated security capabilities through preex- scores and respond accordingly. The product helps isting customer relationships, she said. A 2018 Zelle authenticate high-risk transactions by verifying cus- study concurred, finding that 76 percent of Gen X sur- tomer identities in-session. It could send one-time vey respondents and 74 percent of baby boomers passwords (OTPs) to users’ trusted phones, for ex- tried P2P payments because their FIs offered them. ample, to confirm their legitimacy. Very high-risk transactions are put on hold until the bank can reach “Our older demographic is much more comfortable us- the customers for confirmation. ing products like this through a bank than a FinTech,” Brandon said. “Getting Zelle through the bank makes “I was a little apprehensive [about the solution] customers feel more secure with it. The younger gen- because it sounded like an inconvenience to the cus- erations would still prefer [to get the services from tomer,” Brandon said. “In a way it is, but in another their banks] but tend to use alternate solutions — way, it really sells the customer on, ‘Wow, the bank is which could be FinTechs — if their banks can’t solve watching on my behalf.’ And either [the customer can the pain points that they have.” say,] ‘Yes, that [transaction] is absolutely something I did, please release it,’ or ‘No, absolutely don’t let that FEATURE STORY FEATURE money leave my account,’ — because with Zelle, it’s

© 2019 PYMNTS.com All Rights Reserved | 9 immediate. The money goes, and it’s gone. We’re go- ing to pull [those funds] out right now, and getting it back is not easy.” Under The FIs can also help reduce risks by educating customers on common fraud attempts targeting these payment offerings. Fraudsters might pretend to be selling HOOD goods and request payment through Zelle, for example, but then never deliver on the items. FIs should therefore advise customers to send payments only to recipients they know and trust, Brandon said, adding that banks can provide in-app alerts to help remind How do you predict your customers’ payments customers to double check recipients’ contact details. experience expectations will evolve in the coming years? STANDARDIZING SERVICES It was important for Comerica to use Zelle rather than try to develop and offer its own P2P service, Brandon “Customers are really demanding these faster pay- said, especially since various banks also use it. A com- ments. Even among customers aged 55 to 64, 42 mon platform offers assurance that the service will percent said [in a recent study that] the ability to work for sending money between banks, rather than send instant payments to another person is ‘im-

FEATURE STORY FEATURE only to other Comerica customers. Zelle owner Early portant’ or ‘extremely important’ to them in their Warning Services also provides banks with strict rules banking relationships. … We’re seeing [payment on how to implement the solution, she noted, which experience demands] evolve already.

ensures a standardized experience. Convenience and ease of use are the [main drivers She also explained that it is more cost-effective for of customer experience demands]. Some cus- banks to adopt a single solution and the updates that tomers don’t even realize they had this pain point, the service operator rolls out, rather than for each FI [and FIs must] solve it for them so that they can to invest in its own offerings. use their money when they need to [and] as they want to. Down the road, we need to start integrat- “Comerica is a community bank. If we each try to do ing these experiences to make them more friendly this individually, we’ll probably all end up at same to the average consumer.” place, but we’ll all spend lot of time and resources to get there,” Brandon said. “Whereas [we can instead have] the collective power of all of these entities working together with Zelle. Everyone using Zelle provides feedback that the consortium takes [and combines with] the industry knowledge it has to make enhance- ments [to the service] every quarter.” KRISTY BRANDON senior vice president of eBanking at Comerica Banks are well aware of the growing demand for rapid-fire P2P payments — a demand that, as Comerica found, is not limited to millennials. Consumers of all STORY FEATURE ages are using smartphones and want to quickly send money wherever they want, whenever they want.

SOUTHWEST AIRLINES ENABLES Making mobile APPLE PAY TICKET PURCHASES payments move Airlines are also exploring mobile payments, in this PAYPAL TAPS RTP FOR INSTANT case for C2B transactions. Southwest Airlines recent- VENMO TO BANK ACCOUNT ly signed a multiyear agreement with travel commerce TRANSFERS and payments FinTech CellPoint Digital, formerly PayPal recently announced a new feature for its P2P CellPoint Mobile, and Universal Air Travel Plan (UATP), service, Venmo. The app will now offer instant trans- an airline-owned and -operated payment network, fers to bank accounts thanks to TCH’s RTP rail, with that will enable the former’s customers to pay for tick- JPMorgan Chase & Co. providing connection between ets and other services with Apple Pay. the two services. The offering charges a 1 percent fee, CellPoint will provide common customer experiences which is capped at $10, based on each transaction’s across different digital devices, such as websites, mo- value. The feature appears to be part of PayPal’s ef- bile apps and mobile web, and offer a payments hub fort to generate more revenue from the primarily free that will be combined with UATP’s payment platform. P2P service, which touts 40 million active accounts, Kristian Gjerding, CellPoint Digital’s CEO, said that and compete with rivals like Zelle. the solution will increase customer conversion for This is not the first time PayPal has worked to provide Southwest, demonstrating its utility to other airlines. instant transfers. The company debuted a service Christopher Priebe, Southwest’s director of treasury, enabling Venmo users to instantly send funds to payments and risk, said the product will help the air- linked debit cards last year, and provided PayPal us- line stay current with modern payment trends. ers instant transfers to bank accounts in March. A Venmo blog post noted that funds transferred with these features arrive within half an hour, compared to the one to three business days associated with standard transfers. FEATURE STORY FEATURE

© 2019 PYMNTS.com All Rights Reserved | 11 Faster payment rails announced the FI’s decision to join TCH’s RTP system. Richards, who joined TCH’s RTP Business in the U.S. Committee — an organization that provides insight FORMER HEAD OF ECCHO and advice about the network — in May, stated that RELEASES REPORT ON banks that do not offer instant payments stand to REAL-TIME PAYMENTS RISK lose out to competitors. He added that Cape Cod 5 joined RTP to provide faster payments offerings now, A new report from David Walker, president of Dallas rather than wait for the Fed’s planned instant offering -based consulting firm Tiller Endeavors, claims to materialize. that the risks of pull transactions, especially for real-time payments, are insufficiently understood. Walker is the former chief executive and president Advancing digital of the Electronic Check Clearing House Organization (ECCHO), which created rules to guide banks exchang- payments ing check images. SAUDI ARABIA PUSHES Several launched or in-development instant payment TOWARD CASH-FREE PAYMENTS LANDSCAPE rails rely on credit — or push — payments in which payers’ accounts push money into those of payees. Debit Saudi Arabia is relying on several tools as it pushes — or pull — payments send permissions to the payees’ citizens to abandon cash. Approximately 18 percent accounts, authorizing them to take certain amounts of the country’s payments were digital in 2017, and NEWS & TRENDS NEWS of money from payers. Ubiquitous, real-time push the government intends to raise that portion to 70 payment systems require directories that list all pay- percent by 2030. The 2017 deployment of near-field ers and payees so that transactions can be sent to communication (NFC) technologies and contactless the proper accounts, Walker said in the report. These smartphone and card payments has helped drive directories must be updated promptly whenever a digital transactions, according to Ziad Al Yousef, consumer opens or changes a bank account, other- managing director of national payments infrastruc- wise funds could be sent to the wrong addresses. ture operator Saudi Payments. Fifty-three percent of Maintaining and updating such databases is chal- transactions made in June used NFC, compared to lenging and requires new decisions to be made about just 12 percent in May 2018, he noted. where such responsibilities lie, he said. Micromerchants have been reluctant to invest in the “The risks associated with credit-push directories POS equipment necessary to accept NFC, prompting are not well understood and could be indeterminate- the country to introduce a common QR platform this ly large, potentially including consequential damages,” year. This provides smaller businesses with low-cost Walker said. “The industry can address these risks digital payment acceptance. A third prong of Saudi through multilateral, uniform agreements, but has not Arabia’s push toward cash-free transactions is its ef- yet accepted that mantle.” forts to create a real-time payments system. Saudi Payments signed a contract with Mastercard compa- CAPE COD 5 JOINS RTP ny Vocalink this spring to develop such a system. Christopher Richards, chief banking services offi- cer for Massachusetts-based Cape Cod 5, recently

12 | © 2019 PYMNTS.com All Rights Reserved ECOBANKPAY HAS PROCESSED $2.75M USD SINCE DEBUT The Nigerian branch of Ecobank — a pan-African banking group serving more than 19 million customers — recently announced that its instant digital payments and collection service, EcobankPay, hit 1 billion NGN ($2.75 million USD) worth of payments processed since its launch in February. Consumers using the offering can scan QR codes or (USSD) to pay in stores with Masterpass, mCash and mVisa.

USSD is a mobile payment channel available to consumers who do not have smartphones. More than 90,000 Nigerian merchants use EcobankPay, according to the bank, and users do not have to be members of Ecobank to access the system. The payments ser- and artificial intelligence (AI) to accelerate payouts, vice is aimed at SMBs, and merchants can instantly which are currently limited to paper checks. receive their funds. Attia noted that the company has managed to process 80 percent of its claims within three days, while those for smaller-sized claims can be processed with- Speeding insurance & TRENDS NEWS in hours. It is still working to achieve instant payouts, and pension which require automated fraud detection capabili- payments ties, he said. SLICE LABS DISCUSSES UK CONSIDERS DLT TO ACCELERATING GIG WORKER ACCELERATE PENSION INSURANCE DISBURSEMENTS PAYMENTS Insurance companies are working to accelerate Consumers not only need to receive earned wages claims processing and provide faster payouts to gig quickly, but also require rapid payouts after retire- economy workers. Rideshare and homeshare provid- ment. The United Kingdom’s Department for Work ers not only have to wait for insurance claim funds to and Pensions (DWP) announced that it is exploring arrive, but also are typically saddled with 15- to 30-day distributed ledger technology (DLT) to improve the processing times. timeliness of fund deliveries to its approximately 20 million customers. Richard Laycock, deputy direc- Tim Attia, co-founder and CEO of gig economy insur- tor of digital payments and banking systems at DWP, ance provider Slice Labs, recently spoke to PYMNTS anticipates that DLT could reduce the cost, failure about how the company is shrinking that timeline with rates and time of transactions, as well as provide in- automated processing for its rideshare, homeshare creased data security. The department is also testing and cyber insurance claims. The company’s approach use of Hyperledger Fabric. includes mobile tools and chatbot-based claims filing, and it is examining ways to use machine learning (ML) DWP’s curiosity about emerging technologies follows

earlier department efforts to improve payout speed. & TRENDS NEWS

© 2019 PYMNTS.com All Rights Reserved | 13 The division previously removed its payment system speeds for free, according to WePay CEO Bill Clerico. from the hands of external operators to instead oper- The service will provide deposits by 9:30 p.m. Pacific ate in-house and has since modernized it to enable Time (PT) on the same day for credit card payments near-real-time payments. received by 5 p.m. PT on Sundays through Fridays, while payments received on Saturdays will be avail- Faster payments able by 4 a.m. PT Sunday. INSTAREM TO FACILITATE, and settlements for ACCELERATE SINGAPORE-TO- SMBs CHINA B2B PAYMENTS STARLING, SUMUP PARTNER Singapore-based cross-border payments provid- ON FASTER SETTLEMENTS er InstaReM announced plans to supply SMBs with FOR SMBS B2B payment platforms that will facilitate payments U.K.-based challenger Starling Bank recently from Singapore to China. Singapore spends about partnered with POS provider SumUp in an effort to re- $42.6 billion USD on goods imported from China, and duce settlement times for SMBs. The former stated businesses need to be able to quickly move money that payments made through POS machines typically internationally or they will miss out on opportunities, take two to four days to hit merchants’ bank accounts, CEO and co-founder Prajit Nanu said. InstaRem is part a timeline that the partnership is looking to reduce to of Singapore’s National Trade Platform (NTP), which helps position the former to provide its international NEWS & TRENDS NEWS

NEWS & TRENDS NEWS next-working-day availability. Starling is providing SumUp with an application programming interface B2B payments offering to other NTP members. (API), allowing access to various payment schemes NATIONWIDE TAPS CLEARBANK and bank services, while the latter will provide firms TO ENABLE REAL-TIME with POS terminals capable of accepting payments PAYMENTS WITH FORTHCOMING made with cards, smartphones or wearables. The two SMB BANKING PRODUCTS companies reportedly plan to collaborate on card ac- Nationwide is targeting U.K.-based SMBs with its ceptance solutions for SMBs and micromerchants forthcoming checking account offering. The build- across Europe for five years. ing society previously forged partnerships with 10x Future Technologies — to design a digital platform J.P. MORGAN PROMISES FREE SAME-DAY DEPOSITS FOR to support checking accounts — and Mastercard, CREDIT CARD PAYMENTS enabling it to offer the latter’s debit cards to SMB customers. Nationwide is now relying on a collaboration J.P. Morgan is also taking aim at settlement speeds with ClearBank that will utilize the latter’s payments with the announcement that account holders who use platform to provide real-time payments. The former WePay, which J.P. Morgan acquired in 2017, will be is fueling its work with a £50 million ($61.64 mil- able to receive same-day credit card payment depos- lion USD) grant it received earlier this year from the its, even on weekends. This move is being regarded as Banking Competition Remedies Limited’s Capability an attempt to get ahead of the competition, such as and Innovation Fund. The offerings will include credit FinTechs offering similar services with fees. cards, savings and unsecured loans and are expected J.P. Morgan’s status as both a bank and a payment to launch next year. processor enables it to provide accelerated deposit

The Benefits And Challenges Of Real-Time Push Payments

Consumers, businesses and governments are seeing WHEN ‘PULL’ IS NOT FAST faster payments as a path to greater convenience and ENOUGH financial security, and this growing demand is spur- Common forms of pull payments include debit cards ring payments services providers (PSPs) to meet this and paper checks. Payers provide PINs or signa- need in a swift, secure manner. That consideration in- tures, which grant recipients permission to extract cludes assessing the potential benefits and risks that funds. Pull payments are often used to support recur- come with the two fundamental types of bank pay- ring purchases such as subscriptions or utility bills. ments: push and pull transactions. Consumers do not need to take manual action to com- Push, or credit, transactions see payers instructing plete these payments once transactions have been their banks to send funds from their accounts to recip- authorized, enabling providers to automatically with- ients’ accounts, whereas pull, or debit, transactions draw funds from customers’ accounts. have recipients’ banks extract funds from payers’ ac- Pull payments do carry risks for both merchants and counts. These methods have subtle distinctions as payers, however. Account holders who provide au- well as different advantages, risks and use cases. thorization do not necessarily know when payees This month’s Deep Dive explores how push pay- will withdraw the promised funds and may not re- ments speed transactions, as well as the benefits member to keep enough money in their accounts to and potential challenges of their use in real-time cover the costs. There is a long timeline during which payment systems. payees may call upon the funds, with banks being le- gally required to cash checks within six months of issuance — many will permit doing so long after that time frame. Account holders who do not have enough funds available at the time of withdrawal will be hit push payments. Instant transactions require that with painful fees, and the payee will be left uncompen- money move immediately and irrevocably, and TCH sated until it finds another way to bill its customers. states that supporting push payments only reduces fraud risks. Pull payments require payees to provide Push payments do not carry the same risk and tend sensitive financial details, such as bank account num- to be quicker. The payer is in control of the timing, bers, to recipients. Fraudsters who gain access to meaning he or she will make sure to have sufficient customers’ account details could use instant rails to funds on hand when sending payments. Their banks quickly drain accounts. will decline the transactions should they miscalcu- late their available funds, sparing them from fees Some observers argue that push payments are not and informing suppliers about whether payments are without danger, however, and that FIs need to pro- genuinely forthcoming. Suppliers know to avoid of- tect against attacks most commonly associated with fering their services if transactions fail and receive these transactions. Payers can be tricked into send-

DEEP DIVE DEEP money for their offerings if transactions go through. ing money to incorrect addresses when fraudsters Slower payment methods, such as checks, can leave use fake email accounts to masquerade as home merchants in the dark for weeks. They must wait for contractors, for example, and can convince payers checks to arrive in the mail, then wait an average of to make push payments. Bad actors can also deceive two days for them to clear — a process that can take payers by sending counterfeit invoices with their own up to 10 days, depending on the check’s value and account details in place of those belonging to the in- other details. Push payments also tend to be faster tended recipients. because payers send both payment and money, en- Hackers have also attacked the ACH system, which is abling quicker reconciliation. not instant, to create fake employee files and collect Push payments are typically used for payroll direct payroll payments. These attacks’ dangers are exac- deposits, mobile P2P services or wire transfers. erbated when applied to real-time payment systems. Employers might push payroll funds from company Payment rails that deliver money instantly make it accounts to staff bank accounts, for example, and easier for fraudsters to rapidly collect and make off some have started using push payments to facilitate with funds before they are caught. instant earnings access. This allows them to send A recent report noted that funds can be sent to in- staff accrued daily wages to prepaid or debit cards correct accounts for more innocuous reasons, such after each shift, enabling employees to use their earn- as payment system facilitators’ failures to update ings right away. address directories. Funds can be misdirected if REAL-TIME PAYMENT SCHEMES changes are not made quickly and frequently. The global movement to develop and deploy real-time Countries must consider whether and where push and payment systems is gaining momentum, prompting fi- pull payments fit their needs as they continue to de- nancial players to consider push and pull payments velop and roll out real-time payment systems. Many to bring financial exchanges up to instant speeds. are favoring push payment models for their real-time Instant payment systems such as TCH’s RTP and systems, but they must not forget that these trans- the U.K.’s Faster Payments Service (FPS) only enable actions carry risks they must vigilantly guard against.

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Companies are organized in alphabetical order.

American Express Serve offers prepaid debit card accounts, with money management capabilities and cash load features. Its mobile app supports sending and receiving payments between Serve accounts, check capture, online bill payment and early direct deposit.

American Express Serve VERTICALS