Could faster payment system increase fraud risks?

Earlier this week a new faster transfer system was launched in the banking world, and this will allow consumers to transfer one off payments within a matter of hours rather than waiting three days.

At present 5% of payments are covered by the new system, but by August 50% of payments will be covered, and by the end of the year all payments should be covered.

However, whilst officials from APACS has said that the new system should be ‘great for any customer wanting to move money quickly – perhaps to pay a bill or move money between accounts’ some security officials are concerned that it could fuel a rise in fraud, because the banks will have less time to pick up on any suspicious or unusual activity.

One official stated: ‘The Faster Payment system will be a challenge for banks which could lead to increased risk of fraud, as it will be harder for banks to detect and block fraud in the time window available. The existing process relies, in part, on banks having sufficient time to detect suspicious transactions.’

He went on to state: ‘With more than 20million customers regularly using internet banking, increasing online safety is clearly a priority.’ APACS also said: ‘As with any payment system there is no room for error as it will be an integral part of the UK’s economic infrastructure.’