The New Payments Platform (NPP) is new, world-leading domestic payments infrastructure that enables connected Australian financial institutions to offer their customers – consumers, business and government agencies – near real-time, data rich inter-bank payments 24 hours a day. But what about fraud risk?
KPMG Australia, in association with the NPP Australia Limited have prepared a paper that considers the fraud risk, and the potential impact to fraud risk, of real-time payments.
Fraud risk is a particular operational risk in any payment system, but is frequently cited as being a higher risk in real-time payment systems due to the velocity of payment processing, and the typically irrevocable nature of real-time payments.
Real-time payment systems have been operational around the world for many years, and while data about online banking fraud by service or payment type in those countries is not generally publicly available, many commentators point to the UK implementation of real-time payments in 2008 as evidence for the proposition that faster payments inevitably lead to an increase in fraud. This tends to beg the question whether faster payment systems create new fraud risks.
Experience suggests that real-time payment systems do not create new types of fraud – the typologies of account compromise are consistent across both traditional and real-time payments systems. However, the velocity of payment processing does challenge financial institutions’ fraud detection and prevention tools that were designed and adequate for slower intraday and overnight batch processes.
Unaddressed, this vulnerability could be exploited by fraudsters and scammers.
Read more in our publication.