Feds Push for More than Just Faster Payment, The Goal is Increased Safety

Dec 18, 2017

In July, Part 2 of the Faster Payments Task Force Final Report was released. This report estimates that real-time payments could – and should – be on the payments scene by 2020. The industry seemed to then settle in after analyzing the report.

However, the Federal Reserve jumped in in September with its own comments on how things need to move forward. There biggest concern? Security. Their main priority is to make near-term improvements to payment security, before focusing solely on getting speedier payments. These comments stem from a growing national concern about security in payments and financial transactions, or the lack thereof. The Equifax breach disclosed this summer only magnified this problem and created a greater push for faster payments to support digital transactions.

The Fed’s Next Step

The majority of U.S. payments fraud comes from payment cards. Specifically, signature-based credit and debit cards. Even though the U.S. now has EMV – better late than never – only some of counterfeit fraud has been tamed.

And what are U.S. banks and networks saying about the problem? Most are staying silent. Others are opposed to embracing encryption – it costs money. Overall, they are mainly concerned with protecting themselves from further critiques of their payment modes, which might impact various, ongoing interchange and PIN-suppression lawsuits.

According to Digital Transactions, “the pervasive threat remains largely unaddressed because most card-account credentials remain in the clear—even from the chip—and mag-stripe mode is nearly always on the back of the chip card. Tokenization might help, but end-to-end encryption is the growing consensus choice to solve the problem.”

So, what are the next steps in the Fed’s plan for addressing the situation?

  • If brands and card issuers will not share their data, a comprehensive study will be conducted to assess how serious the fraud problem really is in the U.S. vs. the rest of the world.
  • Identify the known problem areas (e.g., e-commerce friendly fraud, ATM skimming and account takeover) and determine what can and should be done about them.

The Fed’s response in September suggests that it does intend to seek and enlist collaborative and experienced experts to help address security issues in a timely manner. Assessing the relative impacts on all participants in the payments ecosystem is another measure the Fed will likely concentrate on.

Are you concerned about the impact and risk of fraud for your business? eMerchantBroker.com specializes in offering both faster payments and high-risk accounts that minimize your business’ exposure to potential fraud. If you would like to take steps towards mitigating risks, consider what EMB can offer your business.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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