In business, as the saying goes, cash flow is king. Getting invoices paid and money in is essential for businesses to remain healthy and buoyant – and advances over the past few years have made the transfer of money in Australia almost instantaneous.
Back in February 2018, the New Payments Platform (NPP) and the Fast Settlement Service (FSS) were launched in Australia, enabling near real-time payments around the clock for customers of more than 90 financial institutions in the country.
Those technological advancements, together with a shift from cash to digital transactions during the pandemic, have seen digital transactions become the norm, with the average Australian making around 730 digital transactions per year.
The first service available on the NPP in 2018 was Osko, a product of BPAY, which facilitates transactions in under one minute between Australian accounts.
For businesses, the benefits have been significant. As well as being able to receive money for goods and services almost instantaneously, Osko enables staff to be paid in real time, too, while the 280-character description field means full descriptions of the payment can be added to ensure clarity.
When making an Osko payment, you can use the recipient’s bank account details or PayID, which enables near real-time payments to be made to a telephone number, ABN or email address. By creating ‘smart’ addresses for payments, the risk of a payment ending up in the wrong account can be reduced.
However, while using PayID may play a part in your strategy to reduce fraud risk, and can filter out some scams, it’s certainly not a silver bullet – and faster payments have increased the opportunities for cybercriminals to succeed.
Being able to make fast, near real-time payments is hugely beneficial for businesses. Payments for goods and services can be received and made almost instantly, meaning hold-ups that were previously experienced due to funds not being processed and received are eliminated.
However, it also presents some challenges, particularly when it comes to ensuring the safety of transactions.
Research from large financial institutions in the UK, US, Brazil, Canada and India shows that faster payment-related fraud attacks increased significantly in 2022 compared to the previous year, with a significant increase (57%) in mule activity (accounts being used to launder money), consumer account takeover (ATO) where a user’s account is hijacked (71%), and authorised push payments (APP) when an individual is tricked into sending money elsewhere (62%).
Given the immediacy of the transaction, there is little time to run fraud checks, and as the recipient has immediate access to funds, they can be moved on again between a number of accounts in a short space of time – raising a justifiable question: are faster electronic payments safe?
Technically, the answer is yes – however they can open opportunities for cybercriminals to take advantage of.
For example, in cases of business email compromise (BEC), money can be sent to the wrong account in seconds, and moved to multiple different accounts shortly after.
As payments are made around the clock in real time, it presents opportunities for cybercriminals to work during hours that bank staff and victims are asleep, increasing the window of time before detection.
And, while fraudulent card transactions may be reversed through, for example, chargebacks, bank transfers cannot be, which can make funds extremely difficult to recover.
Overseas, more onus is being placed on financial institutions to combat fraudulent transactions. For example, in the UK, following a Supreme Court verdict, the Payment Systems Regulator legislated that banks are required to reimburse victims of authorised push payment fraud (APP) within five days.
In Australia, meanwhile, financial institutions have collaborated to launch the Scam-Safe Accord, which will see a comprehensive range of anti-scam measures implemented across the entire industry.
While financial institutions are working to help prevent payment fraud, it’s essential for financial leaders to build robust yet efficient processes in their businesses that enable prompt payments while identifying and preventing fraudulent transactions. Payments should be made quickly and conveniently where possible, while maintaining the highest levels of security.
Research shows that human error still plays a major role in enabling data breaches and cybercrime, and by automating manual processes where possible, businesses can reduce this risk and strengthen their own defences – while increasing employee productivity, too.
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