The Q&A session during Alacriti’s webinar, Maximizing Growth and Member Engagement With Instant Payments, featuring Keith Gray, Vice President of Strategic Partnerships at The Clearing House, and Mark Majeske, SVP of Faster Payments at Alacriti, offered practical insights into pressing concerns surrounding instant payments. Below are the highlights, presented in a conversational Q&A format.
Q: Has the speed of instant payments increased opportunities for fraud?
Keith Gray: “One of the things from an industry standpoint that was a concern about just the movement towards instant payments was faster payments equating to faster fraud. Well, it hasn’t after seven years.” Gray pointed out. He attributed this to the design of the RTP® and FedNow® networks as credit-push systems, which eliminate unauthorized debits and inherently reduce fraud risks. He added, “You can’t pull funds out without me knowing about it… it’s more secure by nature.”
Gray further explained that advancements within security measures, such as multi-factor authentication, device biometrics, and Know Your Customer (KYC) routines, all have further safeguarded the front end of transactions.
Mark Majeske: Building on Gray’s comments, Majeske highlighted the crucial role of proactive fraud detection for instant payments, which requires systems capable of real-time analysis. “What we’re trying to do is prevent fraudulent transactions before they occur,” he said. Majeske described a layered fraud prevention approach involving transactional analysis, user behavior monitoring, and device-level management to address potential vulnerabilities.
Q: Are there any connections between RTP and member rewards programs?
Keith Gray: “There’s been a lot of interest, especially in the merchant community, about moving transactions from the credit rails, which tend to be way more expensive, to a bank-to-bank payment approach.” While Gray acknowledged ongoing industry discussions about incentives and rewards tied to RTP use cases, he noted, “I’m not aware of anyone doing that at this time.”
Mark Majeske: Majeske suggested creative approaches for credit unions to encourage RTP adoption, such as bundling RTP transactions with premium account services. “If you upgrade to a certain level of checking, then you would have a number of RTP transactions for free,” he proposed. While such strategies are still in the exploratory phase, they could incentivize members to integrate RTP into their daily banking habits.
Q: What level of customer service support is needed for instant payments?
Keith Gray: Contrary to initial concerns, Gray explained that instant payments often reduce customer service demands. “The customer service requirements tend to go down because the member has complete visibility into the transaction,” he said. With real-time transaction confirmations, members no longer need to call to check whether payments have been processed.
Mark Majeske: Majeske echoed this sentiment, adding that financial institutions tend to reorganize current processes to be more cost-efficient. “I have not seen many people in any operational area hiring more people to handle instant payments,” he said. Instead, existing teams can be trained to manage instant payments efficiently, leveraging both the speed and transparency of these transactions to minimize member inquiries.
Q: Should credit unions adopt both RTP and FedNow?
Keith Gray: With the recent launch of FedNow alongside RTP, Gray recommended a dual-network strategy. “Most of the volume comes from RTP right now and for the foreseeable future,” he noted, adding that adopting both networks ensures broader coverage and future-proofing.
Mark Majeske: Majeske agreed, emphasizing the efficiency of implementing both networks simultaneously. “Adding the second is not that big of a lift,” he explained, encouraging credit unions to take a proactive approach to address evolving market demands.
For an in-depth look at instant payments, watch the full webinar, Maximizing Growth and Member Engagement With Instant Payments, featuring Alacriti and TCH.
Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.
