Banks are on guard for an increase in money-transfer scams targeting Australian customers, as a shift to near real-time payments pressures banks to detect suspicious transactions more quickly.
With the new payments platform (NPP) launched to much fanfare on Tuesday, fraud risk is getting close attention within banks, which will have much less time to detect and halt questionable transfers of cash.
The focus on fraud prevention comes amid confusion from some bank customers over their access to the NPP, as banks including National Australia Bank and Westpac explained on social media that many customers could not immediately access the service.
The new payments platform, which will initially involve 60 financial institutions, promises greater convenience for consumer and business customers by allowing inter-bank payments in about one minute, rather than up to three days.
It will also allow consumers to make money transfers without knowing a recipient’s BSB or bank account, and in future is expected to result in innovative payment solutions for businesses.
However, bankers also acknowledge there is an increased risk of scams where consumers are tricked into transferring money to a fraudster. Previously, banks had up to three days to stop such transfers taking place.
“The time to actually detect and take action is diminished and if fraud has occurred, we’ve really got a very limited amount of time to block the transaction,” Commonwealth Bank executive general manager, digital, Pete Steel, said.
“We’ve added in a new level of sophistication to detect the timing and nature of payments, analyse that in real time, and then take action in real time as well.”
Fraud experts have previously noted that online banking fraud more than doubled when the United Kingdom launched faster payments in 2008. Concerns about fraud are one reason the new payments platform was initially launched to only a limited number of people late last year, banking sources say.
Banks refuse to go into detail about their fraud prevention measures, but they have invested in systems to spot potential fraud before the money is transferred out of the bank, such as by monitoring which devices were used to log into accounts, or the location customers were logging in from. The NPP’s fast payment service “Osko” also asks users to confirm they are paying the right person when making a transfer – a step that did not previously exist.
The managing director of payments consulting firm The Initiatives Group, Lance Blockley, pointed out that the NPP covered only “push” payments – where a customer actively chooses to transfer money from their account – not direct debits.
Banks could never completely eliminate the risk of fraud in this area, which often relied on people being tricked into transferring money, he said.
“There’s always going to be those who prey on unsuspecting people, so we will probably see more phishing expeditions and that sort of thing. A lot of fraud and loss could be avoided by individuals carefully checking who they are transferring money to.”
Meanwhile, the extent to which the NPP was rolled out to customers on Tuesday varied from bank to bank. Mr Steele said 130,000 CBA customers had registered for a PayID, which is needed to use Osko.
Senior manager for payments at Cuscal, Nathan Churchward, said the “vast majority” of the 40 banks and credit unions it had connected to the NPP were offering their customers full access to the service.
Westpac told customers on Twitter they would be contacted when they could register, and a spokeswoman said the bank was initially rolling out the service to a “small group” of customers.
NAB said it was gradually rolling out the service in the next month, while ANZ Bank will announce its rollout plan in the coming weeks.
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