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nearly $1.5 trillion since its founding in 2017. Last year it Javelin Strategy & Research reported that one in five
was used for 1.8 billion payments worth over $490 billion. consumers scammed this year reported sending P2P
Nearly 1,700 banks and credit unions are now on Zelle. payments to scammers.
Getting personal "The big banks that own Zelle market the product by

Many smaller banks and credit unions connect to networks telling their customers that the platform is safe and
like RTP through back-office technology providers, like secure," a report issued last month by Senator Elizabeth
Fiserv and Jack Henry. Both companies recently launched Warren stated. Yet fraud and outright thefts are "rampant"
initiatives that leverage RTP to support new payment and show no signs of abating. Most fraud cases involve
solutions. Earlier this year Fiserv integrated its NOW consumers who are duped, not unauthorized transactions.
Gateway and RTP. Fiserv also said it has seen "consistent Federal consumer protections cover only unauthorized
double-digit year-over-year growth" in real-time payments payments, so most banks choose not to reimburse
processed on behalf of client FIs. consumers who are duped into sending money through
confidence schemes—a trend Sen. Warren described as
In October, Jack Henry launched a standalone, real-time "deeply troubling."
P2P payments service that leverages Payrailz, a digital
payments platform it acquired earlier this year. The The Consumer Financial Protection Bureau has been
company described its new Payrailz P2P solution as the pushing for a broader interpretation of Regulation E, the
only open-loop, real-time P2P solution that is financial federal rule set governing EFT transactions. Reg E among
institution-centric, useful to FIs that want to offer other things caps consumer liability for fraudulent debit
customers multiple P2P options. transactions. The consumer watchdog agency suggested
the rules be extended to cover "fraudulently-induced"
"Our experience supporting more than 400 financial EFT transactions, like money sent to scammers via P2P
institutions that are already live on the Zelle and platforms.
RTP networks, with another 156 in various stages of
implementation, has demonstrated that many banks EWS has countered that fraud isn't a big problem on Zelle.
and credit unions are offering access to multiple faster "Tens of millions of consumers safely use Zelle every day
payment networks," said Tede Forman, president of with more than 99.9 percent of payments sent without
payment solutions at Jack Henry. any reports or scams," the company said in a statement. It
further stated it "continuously" alerts consumers to only
Some experts expect RTP and FedNow to evolve as two use the network to engage with others they know and
separate but equal networks. "It will be similar to Visa and trust, and that members are continuously "evolving and
Mastercard, with two brands supporting similar use cases adapting consumer protection measures to address the
and with message compatibility," Riddle said. Natarajan dynamic nature of deceptive activities."
sees a "convergence" that can support businesses' different
needs. "Now there can be some options," he said. Gunasena said RTP's owners take security and fraud
prevention seriously. He described three tiers of fraud
There will not be any interoperability between RTP and prevention that RTP leverages: containment of entry points
FedNow, at least initially, Herman stated. He likened the through technologies like authentication and biometrics,
situation to the early years of mobile phones, when there fraud monitoring and data analysis, and customer
was no "master directory" that linked different providers, education. "We all have a responsibility to educate users,"
and hence subscribers. he said, adding that fraud on the network is "very low
compared to other systems."
Herman noted the big banks that own Early Warning are
"posturing" to get FIs (those using RTP as well as FedNow) Chase and Mastercard, in announcing their pay-by-bank
to "license" the directory it has created. "The Fed isn't solution, said the underlying technology "reduces the
going to want to use a private company. It's going to want likelihood of unauthorized transactions," by freeing billers
its own directory," Herman predicted. from having to store consumer banking information. It also
uses machine learning and Mastercard decisioning tools
Addressing the specter of fraud to analyze best times for initiating payments based on a
payer's historical transaction data and risk patterns, which
Faster and real-time payments are seen as riskier than protects both consumers and merchants, Mastercard said.
credit card payments. After all, there are no chargeback
provisions. Once a payment is sent it is final and Jack Henry, in announcing its new P2P service said "fraud
irrevocable. This has become especially apparent in recent mitigation is optimized with a multi-layered approach"
months amid reports of growing fraud on Zelle, and an that includes one-time passwords and a real-time scoring
unwillingness on the part of FIs to reimburse consumers system.
who are duped into sending money to fraudsters via the
network. Patti Murphy is senior editor at The Green Sheet and co-host of the
Merchant Sales Podcast.

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