by Robert Harris • 6 minutes • October 28, 2024

Keeping Payment Networks Secure from Fraud

All expertise and insights are from human Feedzians, but we may leverage AI to enhance phrasing or efficiency. Welcome to the future.

Secure payments are the bread and butter for payment network gateways and providers. These critical players oversee the essential task of moving funds quickly and securely between senders and receivers. A setback in this arrangement (like fraud) can compromise customer trust and undermine the network’s reputation and relationships.

That’s why ensuring any payments and information sent across networks remain trustworthy, efficient, and secure is critical. The volume of payments occurring across payment networks is only growing.

This means that fraud attacks will grow, too. In this article, we’ll discuss how AI-first adaptable, high-volume solutions can keep payment networks safe from abuse.

 

Key Payment Network Pain Points

Payment networks are expected to deliver flawless service to their customers, namely banks and financial institutions. If the network can’t facilitate transactions, complete the transfer of funds, or fraud slips past unnoticed, it compromises the trust banks put into the network.

 

Reliability is Key

Reliability isn’t just an essential offering for payment networks—it’s critical for survival. A payment network has to work day and night without fail. There’s no room for error when people’s money is on the line, whether it’s credit and debit cards, bank accounts, or other options. Banks and businesses have different needs, and networks need to handle all types of payments, from big transfers to small purchases.

 

Flexibility is Essential

However, it’s not enough to just be reliable. Networks also need to be flexible. Each bank has its own way of doing things, and payment networks must adapt to these workflows. That’s where many older rules-based legacy systems struggle—they’re not designed to meet the variety of needs in today’s fast-changing payment world.

 

Ease of Adoption

On top of that, any fraud detection system has to be easy to implement. Luckily, payment networks already exchange large volumes of information.

They can analyze both inbound and outbound payments. They see what payment methods are being used, where money is coming from, and where it’s going. This gives them a bird’s-eye view that individual banks don’t always have.

 

Think Evolution, Not Revolution

The beauty of payment networks is that they’re already set up to handle fraud detection. Banks already share information about transactions, so it’s more about improving what’s there rather than starting from scratch. A network can add one or two new data points at a time, making fraud detection better little by little. It’s an evolution, not a revolution.

 

The Power of Data Sharing

Networks are in a great position because they already share data between banks. They see both sides of every transaction. On the other hand, banks only have insights into the payments they send or receive. This broad perspective allows networks to spot fraud patterns that might go unnoticed by a single bank.

Adding more details—like payment behaviors or transaction patterns—could help detect fraud even more effectively. The more information a network has, the better it can catch fraud before it happens. And since they’re already processing payments, they only need to build on what’s currently in place.

As liability for fraud shifts from customers to banks, this capability becomes even more critical. Banks could be held responsible for losses caused by fraudulent transactions, especially in cases of scams. With their access to inbound and outbound payment data, networks can provide crucial insights to help banks detect fraud before it happens.

 

Incremental Improvements

The key is making small improvements over time. Adding a few new data fields and running more analyses—each of these steps makes the network more intelligent and better at detecting fraud. It’s much easier to upgrade an existing system than to build a new one from the ground up.

 

A Call for Stronger Network Fraud Controls

Fraud detection is increasingly essential for both payment networks and banks—especially as real-time payment systems expand. For example, Canada is poised to launch its Real-Time Rail (RTR) system as early as 2026.

However, before RTR can go live, it must be secure for users. That’s why Canada’s chief regulator has stipulated that nothing can go live until strong fraud prevention controls are in place.

Some banks and payment providers have tried to tackle fraud by building in-house solutions. But there’s a catch—these systems often aren’t flexible enough to address modern fraud and scam threats. Fraudsters are getting smarter, and rules-based systems frequently struggle to keep up with new types of scams.

 

How Feedzai Keeps Payment Networks Secure

Feedzai delivers unparalleled fraud protection by providing a cutting-edge, adaptable solution for payment networks. Here are the key components that separate our solution from other players.

 

Cloud-Based Platform

Feedzai’s cloud-based system is ready-built to share insights across its community—without compromising customer data. When one member detects a new fraud trend, those insights, not data, can be shared securely and without breaching privacy rules, with others using our platform. This creates a community of shared knowledge, which helps keep everyone a step ahead of the fraudsters.

 

RiskEngine

Feedzai’s Risk Engine is designed to handle massive amounts of data. It already processes over 5 trillion transactions per annum—a level that is comparable to other major network providers. This capability is essential for today’s high-volume, real-time payment networks. As payments move faster, so does the risk of fraud, and Feedzai ensures that every suspicion of fraud is flagged without slowing down the network.

 

Flexibility and Speed

Fraud tactics evolve quickly, so payment networks need solutions that can adapt just as fast. Feedzai offers unmatched flexibility, allowing networks to update fraud detection rules and machine learning models in a matter of days. This speed is crucial for staying ahead of the latest fraud schemes.

 

Richness of Data

Feedzai doesn’t just look at outbound payments; we monitor both inbound and outbound transactions. This gives us a complete view of payment flows, allowing us to detect fraud more accurately. By understanding where payments come from and where they’re headed, we can spot patterns other systems might miss.

 

Why Trust Feedzai for Payment Network Security

To secure their bread and butter, payment networks need a reliable collaborator who is committed to stopping fraud. Here’s why Feedzai stands out as a leading industry partner.

 

Gain a Trusted Partner

When it comes to fighting fraud, Feedzai understands how these payment networks and banks work inside and out. Our goal is simple: to detect fraudulent activity early before it can cause harm. That way, banks can keep their customers safe, and payment networks can maintain their reputation for security.

 

Work With an AI-first Organization

Feedzai was built from the ground up as an AI-first company. Artificial intelligence wasn’t added later—it’s been at the heart of our solutions since day one.

AI and machine learning are deeply etched into our DNA. It’s what powers our ability to process massive amounts of data and identify even subtle signs of fraud. Our unique origins as an AI-first company empower us to keep pace with evolving threats easily.

 

Singleness of Purpose

Feedzai is laser-focused on fighting financial crime. Because we work with so many network providers, we’re able to share knowledge and insights across the industry. This means our clients benefit from the collective experience of other leading institutions.

Payment networks are critical links between banks, businesses, customers, and other players. Trust sits at the foundation of every relationship between these players. Working with a trusted, single-minded partner with AI baked into its operations is critical for payment networks to keep that trust and stop fraud in its tracks.

Page printed in November 13, 2024. Plase see https://www.feedzai.com/blog/keeping-payment-networks-secure-from-fraud for the latest version.