A practical guide to choosing the right real-time payments fraud prevention solution

Overview of Real time Payments Fraud Prevention?

• What are Real-time Payments?

Real-time payments are an instant or quick payment process for financial transactions from one account to another, which ensures the end-user receives the amount immediately.

These payments are useful for financial institutions because they allow them to complete the payment process quickly and efficiently and avoid operational delays and late payments.

Navigating Complex Fraud Challenges in Real-Time Payments

Financial fraud encompasses a variety of frauds, with payment fraud at the forefront. As cybercrime keeps evolving, the complexity of real-time payment systems also needs to be addressed precisely to prevent future fraud and ensure security during the payment process.

Fraud Challenges in Real-time Payments are as follows:

• Transaction Frauds: Transaction fraud is a dangerous form of fraud. It occurs when the fraudster executes unauthorised transactions without the knowledge of the account holder. These frauds are targeted at real-time transactions, creating a huge challenge for financial institutions to detect.
• Digital Payment Frauds: A report estimates that global digital payment frauds are expected to surpass $343 billion by 2027. Digital payment fraud includes online purchases or misuse of real-time payment platforms. Fraudsters can gain access to digital payment accounts illegally and perform unauthorised transactions.

  Also, they can create fake UPI handles to trick people and make them reveal their account details through fake UPI apps, which can lead to potential fraud and money loss.

• Phishing: Phishing is a crime where fraudsters send deceptive communications through SMS, emails, or phone calls, posing as trusted sources, like banks, to obtain account information.

  With this fraudulent information, real-time transactions can occur, stealing money from the victim’s account. In such scenarios, tracking the trail of fraud can be difficult.

• Social Engineering: Social engineering is also known as the art of manipulating human emotions. Fraudsters target individuals to gather personal and sensitive information by spreading malware, which is similar to phishing, to commit transactional crimes.
• Identity Theft: In the context of real-time payment transactions, fraudsters can steal identities, such as personal information, to portray themselves as account holders. This fraud includes leveraging the person’s details to open a new bank account or indulge in any digital service without their knowledge.

  Before the fraudulent activity is identified, there is also a possibility that the scammer has the potential to damage the account holder’s reputation and create a huge financial loss.

Benefits of Real-Time Fraud Prevention Solutions

Financial institutions using traditional fraud prevention solutions face challenges like manual processes and slow response times. An effective fraud management solution not only detects errors but also prevents them from recurring.

Real-time payment fraud management is an immediate measure that encompasses many benefits, including swiftly detecting, controlling, and mitigating real-time frauds.

Let’s highlight the benefits of real time fraud prevention solutions.

1. Enhanced Security

Every financial operation and institution demands a secure, integrated fraud management solution. Real-time payment fraud prevention systems are multi-layered, resilient, and robust. They effectively counteract potential threats and monitor transactions, significantly enhancing security.

Instant payment fraud protection solutions detect and mitigate any suspicious activity or fraudulent transactions immediately, safeguarding user profiles.

For example: if there is an unauthorised login or suspicious activity in your account,  real-time payment solutions immediately detect it, inform the relevant authorities, and send an alert to take preventive action promptly.

2. Frictionless Transactions

A real-time payment detection solution initiates an effective payment process. Users can experience smooth and speedy transactions with instant verification without any delays or additional steps. This approach facilitates convenience and fosters trust.

For example: A fintech company leverages a real-time payment system that supports users making quick payments with instant verification, ensuring a hassle-free experience and building customer confidence in its services.

3. Prompt Detection

The most important benefit of using instant payment fraud detection solutions is their ability to promptly detect unauthorised transactions and unusual spending patterns in real time. With the help of artificial intelligence (AI) and machine learning (ML) capabilities, fraud prevention systems can analyse and detect large amounts of data without slowing down the transaction process.

For example: If a specific user’s transaction profile has a spending track of Rs. 500, an immediate deviation in the track, such as a transaction of Rs. 500,000 will result in the flagging of unusual purchase behavior. Real-time fraud prevention systems instantly detect this, flag it for further review, and report this unusual transaction to the user.

4. Adaption to threat landscapes

Threats and fraud in the transaction process evolve over a period of time and cannot be eradicated completely. In the real-time payment process, it is hard to predict and identify changing threats.

A well-equipped real time fraud detection solution can adapt to transaction fraud environments. It leverages past and present transaction data by using machine learning algorithms to predict future threats and take immediate action regarding potential fraudulent activities.

For example: If fraudsters employ new techniques to steal money from the user during the real-time transaction process, the fraud detection system analyses, adapts, and detects the new pattern, instantly reporting potential fraud.

5. Reduced risk of payment fraud

Implementing an instant payment fraud management solution reduces potential payment fraud, resulting in lower financial losses. It continuously and actively monitors and analyses transaction data to ensure the transaction ecosystem is safer for customers.

For example:A bank leverages a real-time payment fraud prevention solution to send an immediate alert to the user when unusual purchases or illicit activities occur without the user’s knowledge.

6. Smart Data Utilisation

Financial institutions handle large amounts of data related to transaction processes, including real-time payments. Effective monitoring and fraud detection depend on utilising this extensive data to identify and address potential fraud quickly.

Traditional systems struggle with the increasing volume and complexity of transaction data. An advanced real-time payments fraud prevention solution efficiently processes, analyses, and takes immediate action on extensive datasets.

For example: If a Payment Service Providers (PSP) faces data analysis challenges due to an increased transaction volume, a cognitive real-time fraud prevention system with adaptive analytics can ensure efficient fraud detection and regulatory compliance, thereby driving effective decision-making.

Criteria for choosing real-time fraud management solution

Every CTO, before integrating precise fraud management solutions, must consider the key requirements 

Why are real-time solutions required for their financial operations?

• Growing Fraud Incidents
• Quick Threat Reduction
• Customer Satisfaction and Trust

Real-time solutions are crucial because they provide agility, guaranteeing that financial operations remain secure and trustworthy. By addressing these key reasons, financial institutions can maintain a reliable customer experience.

A payment fraud prevention solution is essential for financial institutions. As financial threats and frauds continue to evolve, selecting a robust real time fraud detection solution becomes increasingly important.

Let’s break down the criteria for selecting the best real-time payment solution for effective fraud detection.

• Multi-layered Defence: As a first step in choosing a fraud risk mitigation solution, security is the most essential and needed concern in every financial operation. A reliable fraud detection solution integrates with multi-layered support to detect and mitigate potential fraud happenings.

  The multi-layer security mechanism keeps the transaction ecosystem secure and safeguards against firewalls and malware through software installation. Two-factor authentication is a highly secure layer that differs from traditional methods (signature verification, passwords, and card verification).

  It has now evolved and is verified through a biometric scan or QR code via message to make the transaction process safer and more secure. This method adds an extra layer of security to user accounts and payments, reducing the risk of fraud or having amounts stolen.

  Every layer acts as a defence against various kinds of fraud, making it far more difficult for scammers to access the system.

• True Real-time Mechanism: A true real-time mechanism in fraud management solutions ensures accurate fraud detection and data processing.  Leveraging advanced artificial intelligence and machine learning algorithms, the system processes data at high speeds for instant fraud detection without disrupting genuine transactions.

  It maintains high efficiency in real time fraud detection and prevention by continuously learning from past data to adjust to new fraud patterns.

• Cognitive Behavioural analytics: Behavioural analytics is a crucial criterion to consider when choosing an effective fraud prevention solution. It involves actively monitoring and tracking user behaviour to detect fraud more effectively.

  With advanced algorithms, payment detection solutions analyse how users typically interact with their accounts and understand their usual behaviour patterns. By leveraging AI mechanisms, behavioural analytics examines user data and takes immediate action if any unusual behaviour occurs.

  The ability to adapt and evolve to threats makes behavioural analytics a powerful cognitive tool for combating sophisticated fraud tactics. This results in a proactive approach to payment threat detection, continuously learning from user behaviour to enhance the accuracy of identifying potential threats and minimising false alarms.

• Scalability: As financial transactions expand, fraud management systems need to grow to handle increased transaction volumes and emerging fraud threats. This makes it crucial for financial institutions to choose scalable fraud management solutions.

  Opting for a cloud-based fraud prevention system provides unmatched scalability. It allows for the storage of growing transaction data without compromising performance or security.

  A cloud-based fraud management system can facilitate easy updates and upgrades, quickly adapt to new threats, reduce downtime and integrate the latest security protocols.

Process of real-time payments  fraud  prevention solution

Due to the growing number of frauds and user transactions, real-time payment solutions for fraud prevention are highly important for financial institutions. Digital payment has revolutionised the payment process, yet it has also opened a gateway for digital fraud. This has pushed financial institutions to look for the right fraud prevention system.

Before integrating an effective fraud prevention system, financial institutions should thoroughly understand its processes. These processes ensure that transactions are secure and that any fraudulent activities are promptly identified and addressed.

Here’s a detailed look at the process behind real-time payment fraud prevention.

1. Embedding Advanced Technologies

To address evolving financial crimes, consider integrating an advanced and cognitive real-time fraud detection platform with AI and ML applications. Implementing these technologies offers multi-channel fraud protection across online transactions, mobile payments, and account access. This approach not only curtails the development of frauds but also guarantees that legitimate transactions proceed seamlessly.

2. Regularly monitor transactions

Once the fraud management platform is integrated, it initiates continuous transaction monitoring with real-time fraud detection and response to emerging threats.

By analysing transaction flows in real time, financial institutions can quickly identify unusual patterns or behaviours that may indicate fraud. Frequent monitoring minimises possible financial losses and upholds consumer trust by enabling prompt intervention in fraudulent activities.

3. Identify Anomalies

Identifying variations and outliers in transactions is crucial for advanced fraud detection and prevention solutions. Leveraging AI and ML for real-time monitoring helps safeguard operations against anomalies, such as sudden spikes in transaction volumes or irregular spending patterns.

Additionally, real-time fraud prevention solutions incorporate external screening to help enhance security, ensuring comprehensive protection and rapid fraud detection.

4. Detect and Respond to Fraud in Real-Time

Quick discovery and action are essential to stopping payment fraud efforts, which is the foundation of real-time fraud management solutions. Banks, fintech and other financial institutions can utilise payment fraud prevention solutions through an advanced application (AI-ML, behavioural analytics) and multi-factor authentication.

5. Report Suspicious Activities to Regulatory Authorities

Once the frauds are identified and detected, a real-time fraud prevention system reports to the relevant regulatory authorities. Adhering to regulatory regulations is an essential part of any fraud prevention approach. It provides real-time alerts and fosters timely reporting that helps authorities track and analyse fraudulent activities on a larger scale.

Safeguard Your Transactions with BANKiQ’s Real-Time Payment Fraud Prevention Solutions

BANKiQ is a leading and comprehensive Fraud Risk Management solution provider with a suite of tools for financial institutions to fight current and evolving payment frauds. As a next-gen payment fraud prevention solution, BANKiQ features multi-channel detection, real-time monitoring, external screening, and intuitive analytics, ensuring comprehensive fraud protection.

BANKiQ’s real-time fraud prevention solutions include:

1. Fraud-Risk-Compliance (FRC)

BANKiQ offers FRC, a cognitive ML-based prevention solution for payment processing with suspicious transaction reporting. It is also a safe platform for secure payments for banks, payment aggregators (PAs) and payment service providers (PSPs). FRC integrates with multi-channel workflow to access, protect, monitor and secure transactions.

2. Intelligent Fraud Risk Management (IFRM)

IFRM by BANKiQ is specifically for larger banks and acquirer banks and supports multi-channel fraud. This solution also comes with ML-enabled capabilities to track customer behaviour and detect and prevent frauds before it happens.

3. PULSE

BANKiQ’s PULSE is a hosted cloud-enabled FRM platform mainly for small banks, and cooperatives. It comes with pre-packed fraud rules, risk-based transaction monitoring, and fraud prevention for all payment channels, including digital payment channels.

It offers a digital payment fraud prevention approach that provides tailored detection, alerting, and blocking features to protect against digital payment frauds.

4. Intelligent Anti-money Laundering (IAML)

BANKiQ’s IAML solution primarily assists in eliminating money laundering.  It also ensures that the banks are not supporting illicit activities and making sure they comply with rules.

IAML solutions streamline workflows, reducing the time and costs associated with traditional money laundering operations and compliance. They also help banks detect suspicious transactions by offering features like customer risk scoring, name screening, case management, and suspicious transaction reporting (STR).

Final Note

Financial institutions can find it challenging to determine the authenticity of transactions. Deploying an ideal real-time fraud prevention solution can significantly assist financial institutions with fraud risk management.

With BANKiQ’s new modern-age fraud prevention platform, financial institutions can stay ahead by balancing the need for quick and user-friendly transactions with strong security measures. It is integrated with real-time and cognitive AI-ML-leveraged capabilities to combat modern financial crimes and keep financial institutions ahead of the curve.

Reach out to the experts today at BANKiQ for real-time fraud management solutions!

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