What Will Drive the Use of Faster Payments in the US?

Awareness of instant payments has grown significantly in the U.S. payments ecosystem since the launch of FedNow last July. Many banks have signed up for FedNow, but transaction volumes remain low because only the receive mode was activated, said Reed Luhtanen, executive director of the U.S. Faster Payments Council.

See Also: Webinar | Everything You Can Do to Fight Social Engineering and Phishing

“We need those financial institutions who are connecting to receive-only to progress and to send,” Luhtanen said. “That will really unlock usage that we’re not seeing today.”

Fraud is a concern with faster payments, and Luhtanen recommends that banks implement well-defined processes for handling exceptions related to fraud. “That breeds a sense of trust in those payment types when you know what those rules are going to be and how it’s going to be handled if something goes wrong. That said, the details of that type of process have to be fair to all involved,” he said.

In this video interview with Information Security Media Group, Luhtanen discussed:

• Strategies for encouraging more banks to activate the send option;
• The need to develop consistent user interfaces and verbiage;
• Common rules and structures for handling fraud.

Luhtanen has extensive experience in the payments industry and has served on the U.S. Faster Payments Council’s board of directors and on the Federal Reserve-sponsored Governance Framework Formation Team, which created the U.S. Faster Payments Council. He also served on the Corporate Advisory Group for The Clearing House’s real-time payments system.