Portals and Rails, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Portals and Rails and look forward to collaborating with you.
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January 19, 2010
Retail Payments Risk Forum hosts conference on risks in emerging payments
The third annual Retail Payments Risk Forum conference, "Emerging Retail Payment Risk Issues: An Industry, Regulatory and Law Enforcement Dialogue," has come and gone, drawing a mix of bankers, regulators, and law enforcement representatives Nov. 5–6 at the Atlanta Fed. Unfortunately, many of the risks and fraud threats to emerging payments discussed at the conference will be with us awhile.
The good news is that the conference is one of the ways the stakeholders can collectively advance the fight against risk and fraud, through sharing information and strengthening relationships. Much of the information shared at the conference is now available on this site, including a conference summary and the presentations delivered by conference speakers.
As in the past, attendees participated in breakout sessions designed to promote the development of actions that all group participants could take during the year to collaboratively address issues of risk discussed during the conference.
Emerging payments create challenges and opportunities
Some key themes covered in the conference focused on the challenges and opportunities for payments risk management in an environment of technological change. The keynote speaker highlighted the fact that financial services companies must adapt to an array of transformative technologies in a time when consumer confidence and trust in financial institutions are threatened. Nonbanks continue to enter the retail payments marketplace to compete with regulated financial institutions for market share. An expert panel spoke on emerging payment market developments and outlined the trends and risks in new payment channels and devices, noting that contactless devices, mobile commerce, and social networking platforms are areas to watch. The person-to-person payment area is particularly ripe for innovation.
Alternative payment types and new providers can lead to increased security and fraud risks, requiring increased public and private engagement to promote effective risk-mitigation practices industrywide. This engagement is difficult as many financial institutions' risk management efforts can be fragmented by payment delivery type. While financial institutions must look across payment channels to develop holistic risk-mitigation programs, time-tested practices of ensuring dual controls and segregating duties in operations are still critical elements of effective risk management. Newer fraud schemes such as corporate account takeovers, analogous to corporate identity theft, can be combated effectively with current risk management tools if properly implemented.
Growing threats from data breaches and cybercrime
Still, the growing threats to cybersecurity by global crime rings represent a significant industry challenge. Panel experts discussed private and public partnerships and initiatives in place to respond to increased fraud in retail payments and improve the resiliency of the financial services sector. Law enforcement representatives discussed trends in criminal activity and recent successes in shutting down global crime rings. Industry practitioners discussed the need for better information sharing with financial institutions and law enforcement agencies to prevent criminals from migrating across payment systems and financial institutions.
This event offered the participants a deep and broad update on trends and issues of the day as the payments industry, regulators, and law enforcement all seek to work together to understand, mitigate, and deter risks and fraud in the emerging payments environment. Clearly, further work remains, and the landscape is ever changing. But the challenges faced are common to all parties, presenting an imperative for common understanding, information sharing, and collaborative action.
By Cindy Merritt, assistant director of the Retail Payments Risk Forum
January 19, 2010 | Permalink
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- account takeovers
- ATM fraud
- bank supervision
- banks and banking
- card networks
- check fraud
- consumer fraud
- consumer protection
- cross-border wires
- data security
- debit cards
- emerging payments
- financial services
- identity theft
- law enforcement
- mobile banking
- mobile money transfer
- mobile network operator (MNO)
- mobile payments
- money laundering
- money services business (MSB)
- online banking fraud
- payments risk
- payments study
- payments systems
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- remotely created checks
- risk management
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- social networks
- third-party service provider
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- Unfair and Deceptive Acts and Practices (UDAP)
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