As Same Day ACH offers a progressive step toward faster payments, there is a bigger question revolving around how this will change the dynamics of ACH frauds.
Historically, ACH has not been the fraudsters’ first choice to transfer money. This is due to the fact that it normally takes about one to two business days for the settlement to be completed. During this time if the financial institutions or originators notice any anomaly, they can easily stop, cancel, or revert the transaction. In other words, the current ACH network provides a cushion for FI’s to catch suspicious transactions.
Fraudsters, however, know that once they start a transfer request, time is the most crucial element, and that any minute delay will increase the chance of being caught. All it takes is for an account holder to check their balance or see a notification email, or a bank employee to find something unusual and take a second look. Fraudsters know that once their transfer request goes off the regular path, they are caught. So they do their homework and make all the necessary preparations before requesting a transfer to have a fast, smooth and successful transition. That is why, if available, fraudsters prefer using wire over ACH as wire is quick and irrevocable, and the money is transferred within minutes.
However, the introduction of Same Day ACH can change this dynamic. It is true that Same Day ACH is not going to be as fast as wire but, having access to such a high volume network that guarantees transition completion in the same day means a lot, especially if you know how to play with cut-off time intervals (which we know how fraudsters are good at it). So depending on the widespread adoption of Same Day ACH, we should expect a drift in fraudsters’ perception toward using the ACH network which then raises the question of whether FI’s are ready or how they are preparing to mitigate fraud risk due to Same Day ACH.
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