The Growth of Real-time Payments and Fraud in Asia
The payments landscape in Asia is rapidly evolving, thanks to the emergence of new payment methods. The trend towards mobile payments has bolstered the use of mobile devices for financial transactions and spurred innovation across industries, while real-time payments have delivered incredible efficiency and convenience by providing a digital equivalent of physical cash that allows people to pay for things instantaneously.
In Asia, these technologies are being adopted by a rapidly growing middle class with increasing disposable income and a rising demand for financial services. The adoption has of course been turbo-charged by the pandemic. In India for example, our research showed that 95 percent of consumers do all or most of their banking online and have been keen adopters of real-time payments, with 78 percent uptake this year, a level significantly higher than customers in leading economies such as the U.S. (26%) and Germany (20%).
The appeal of these banking innovations has also made it a honeypot for fraud. Scammers are attracted to the increase in money flows and finding new inexperienced consumers to con online. One such cybercrime called Authorized Push Payment (APP) fraud, is a scam where fraudsters trick a target into sending them money. This makes this scheme particularly difficult to detect and prevent.
What’s concerning is that not all customers may be aware of the risks involved in banking services like real-time payments. As money is transferred near instantly to a peer or to a merchant, victims don’t have a window of time where they can try to reverse a payment once they realize they have been deceived. Fraudsters also swiftly launder it through multiple accounts, making it difficult to trace.
Indians Most Concerned About APP Fraud
FICO’s research revealed that Indian consumers were the Cryptocurrency scam recovery services awake to the threat of Authorized Push Payment fraud. Fifteen percent of Indians said it was the type of fraud that concerned them the most. This was much higher than the U.S. (5%), the UK (6%), Indonesia (10%) and Thailand (9%).
What we are seeing is that APP fraud is becoming a bigger problem in India and across Asia as we see a boom in the use of real-time payments. Real-time payment systems such as India’s Unified Payments Interface (UPI) have been a prime target for fraud as transaction volume on the platform grows at a breakneck pace. One of the issues is that the platform is often used for transacting small dollar amounts, where hardly any authentication or verification checks are used, making users more vulnerable to fraud
Protecting real-time payments requires analytics that look for changes in customer behavior such as using accounts or devices outside of their usual habits, as well as standard anomalies such as time-of-day or frequency of a transfer. FICO has found that the use of targeted profiling of customer behavior to spot scams has yielded some impressive results with 50 percent more scam transactions detected.