A key conflict that will significantly influence fintech developments in 2025 is the evolution of instant payments and the concurrent rise in fraudulent activities.
Reed Luhtanen, executive director of the US Faster Payments Council, addressed the threats of fraud to instant payment security in a recent FinextraTV interview. He emphasized that while fraud poses risks, it should not impede progress. Luhtanen noted, “It’s essential to acknowledge what’s happening… Fraud over instant payment rails in the United States has been quite rare, and in other markets with broader use cases, instances of fraud are similarly limited. While it’s crucial to address and understand these issues, we shouldn’t let them hinder advancements.”
With a more optimistic perspective on the potential vulnerabilities of instant payments, the focus shifts to the effective implementation of these systems. For those just starting their journey, this can be a daunting challenge.
Luhtanen offered guidance on moving forward: “I advise financial institutions to focus on two main points: first, develop a strategy centered on enhancing service for existing customers while also attracting new ones. Second, identify the necessary partners to execute that strategy before diving into project planning and implementation.”
This structured approach addresses the urgency companies often feel when faced with emerging technologies, which can sometimes lead to hasty decisions due to a lack of understanding. To assist, the US Faster Payments Council provides a complimentary supplier catalog.
Despite the growing acceptance of instant payments worldwide, some still express hesitance. Luhtanen shared that in the US, trust and certainty are critical. “To build trust, we must mitigate fraud, but we also need clarity on how losses are managed and how errors are resolved when fraud occurs.”
Ultimately, while the fear of fraud is justified and should inform preventative measures, the drive for innovation should not be restrained by uncertainty. Companies must prioritize discussions surrounding fraud, regardless of their views on its impact within instant payment systems.