REDWOOD CITY, Calif., August 28, 2024 – The U.S. Payments Forum, the only nonprofit whose members include the entire payments ecosystem, today announced its summer market snapshot. It provides perspectives on payments industry technologies and trending topics including real-time and electric vehicle (EV) payments, card-not-present (CNP) fraud and more that were shared during its members-only meeting in July.
Real-time payments
In a fact-filled keynote address, Elspeth Bloodgood of Jack Henry™ posited that instant payments are at an inflection point. Noting that adoption has been significant with participation and transaction volume growing sharply, she acknowledged that the industry still has many things to work through to develop new use cases for Send and Request for Payment.
For consistency in communicating, she defined the faster payments topic in the United States as an umbrella term that includes instant payment networks, such as the RTP Network and FedNow Service, as well as other faster payment methods that do not offer immediate settlement such as push to card and same day ACH.
One year after its launch in July 2023, the FedNow Service has 864 institutions live. Reporting on the 252 participants that are Jack Henry™ clients, Bloodgood said receive transactions have grown significantly since use cases began to come to market in Q3 2023.
The RTP Network, which launched in November of 2017, now has 668 institutions live and reaches about 70% of consumer and commercial DDA accounts, according to the Clearing House, network owner and operator. Year-over-year growth in the last 12 months has been strong, with transaction volume up 41%, value, plus 89% and financial institutions on the network up 91%. Q2 2024 transactions reached 82 million for $55 billion.
She pointed out that Send, which allows organizations to credit individuals or businesses via instant payment, is a riskier transaction than Receive and is developing more slowly. Institutions want to perform risk assessments and be certain of their compliance posture before they release new products now coming to market. She also projected a relatively slow uptake for Request for Payment messages, which is currently supported by only a handful of institutions.
Minimal fraud was reported on the RTP Network in 2023, and the rate continues to be low due to the predominance of business to business and business to consumer use cases. Institutions looking to add consumer and small business use cases will want to be sure they are controlling risks and complying with AML and other regulatory programs.
New rules from the Consumer Financial Protection Bureau regarding earned wage paycheck advances and recent regulatory actions highlighting deficiencies in institutional oversite of fintech Payment-as-a-Service compliance are also challenges the industry will have to address to move some of these use cases forward.
Card not present and first party fraud trends
Representing the Merchant Risk Council, Julie Fergerson reported that for the first time in 25 years, refund/policy abuse and first party misuse were identified as the leading threats in e-commerce payments, surpassing phishing in both North America and Europe in their latest annual global survey on payments and fraud.
Executives responsible for payment strategy and fraud mitigation at U-Haul and one of the world’s largest interactive entertainment and video gaming platforms both confirmed these findings and underscored the importance of better data to address these problems.
“Having the data is everything to making sure you understand why there is a chargeback,” said Brad Coffey, payment operations manager for U-Haul. “Ensuring appropriate compelling evidence is available to prove charge legitimacy is key. Following this up with formatting that allows for consistent chargeback representment is essential to addressing the problem.”
The payments risk and fraud executives from the gaming company stated that first party fraud has always been a focus for them. They put a lot of energy into the re-presentment process and try to be revenue recovery positive. They also agreed that having clear data is essential to good orchestration, better up-front fraud mitigation, clean re-presentment strategies, clean AI and clean data models.
On the topic of tokenization, the group emphasized the importance of getting updated underlying credentials, especially with virtual cards where the underlying PAN could be a compromised card that was not properly updated. Fergerson likened these problems to the “growing pains” experienced in the early days of account updater rollout.
Another strategy discussed was A/B testing of different dispute re-presentation packages, arguing that there is a good, better, best potential for re-presentation like there is for other elements of the transaction network. The panel also recommended monitoring Pastebin, Telegram and other sites to identify exploits being shared amongst players, and highlighted direct carrier fraud, where billing is done into cell phones, as an important focus area.
There was also consensus on the importance of working with partners and team members to make sure they better understand the importance of security measures such as AVS and CVV in their products.
The evolving landscape of EV payments
EMVCo’s Oliver Manahan, presented upcoming changes being developed by EMVCo to provide interoperable and seamless card-based payment experiences for EV charging leveraging the ISO 15118 standard. As a testament to the Forum, the organization’s February 2023 position paper on this topic helped encourage EMVCo to take action on EV payments issue and provided valuable guidance on the issues that need to be addressed.
Joint merchant and issuer discussions
In a very lively merchant and issuer session, many topics were identified and perspectives exchanged, a clear example of the unique value for cross-stakeholder communications offered by the Forum.
On the topic of network token authentication frameworks and their effectiveness at combating fraud, the consensus was that 18 months after launch, there was little merchant pickup, the exception being Apple Pay which dominates the wallet space. One point made from the merchant perspective is the issuer needs to be enrolled. A representative from the Merchant Advisory Group said that small merchants tend to be more dependent on what their providers give them versus large merchants that have more control over the technologies they support regarding this issue.
Challenges with EMV® 3-D Secure (EMV 3DS) were discussed. One viewpoint expressed was that many senior industry leaders cling to the perceptions from the early days that 3DS is risky, ignoring the upgrades and step-up authentications now available.
Some merchants expressed that they were seeing more step-ups from some issuers, despite the promise that EMV 3DS was supposed to have fewer step-ups than early versions of 3DS. Another point made was that no 3DS solution has been implemented for domestic networks.
Other topics of common interest were lower approval rate trends, barriers for Mobile Driver’s License (mDL) adoption and the ramifications of the Illinois Interchange Fee Prohibition Act.
Forum priorities
The U.S. Payments Forum will be hosting its annual Fall Member Meeting taking place from Tuesday, November 12, 2024, through Wednesday, November 13, 2024 in Newport, Rhode Island. The fall meeting will connect payment industry leaders for discussions on technology implementation opportunities and challenges, trends in the market and other timely topics. Sessions include keynotes, roundtables, panels and special interest groups.
The U.S. Payments Forum’s primary focus is to provide a platform for solving cross-industry challenges and promoting innovation. This is achieved through collaborative discussion, networking events and educational resources. During the Forum’s member meeting, stakeholders identified key opportunities for improvement and growth within the payments landscape.
Organizations, associations, government agencies and individuals interested in participating in upcoming Forum projects can visit the Secure Technology Alliance’s website to learn how to become a member. By joining the Secure Technology Alliance, members will have access to activities within the U.S. Payments Forum, the Identity and Access Forum and additional Alliance working committees.
About the U.S. Payments Forum
The U.S. Payments Forum is a cross-industry body that brings stakeholders together on neutral ground to enable efficient, timely and effective implementation of emerging and existing payment technologies. This is achieved through education, guidance and alternative paths to adoption. The Forum is the only non-profit organization which includes the whole payments ecosystem, ensuring that all stakeholders have the opportunity to coordinate, cooperate on and have a voice in the future of the U.S. payments industry. The organization operates within the Secure Technology Alliance, an association that encompasses all aspects of secure digital technologies.
About the Secure Technology Alliance
The Secure Technology Alliance is the digital security industry’s premier association. Through its U.S. Payments Forum, Identity and Access Forum and its collaborative working groups, the Alliance fosters open dialogue among industry stakeholders to explore and develop secure technology innovations in the payments, identity and access markets. By collaborating on education and guidance, the Alliance helps enable efficient, timely and effective implementation of large-scale, disruptive technologies. For more information, please visit https://www.securetechalliance.org.
Contact
Mike Smith
Montner Tech PR
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