Unique Research · Finance · December 4, 2024
Demand for fast payments keeps rising — and so does fraud risk. Last year, 170M+ U.S. consumers received at least one instant payment.
PYMNTS Intelligence with Ingo Payments (Protecting Instant Payments from Fraud): speed creates new challenges — once funds move, recovery is hard. Financial institutions (FIs) are adopting advanced AI and machine learning to fight fraud and harden instant rails.
Instant-payment vulnerabilities
Instant payments are becoming table stakes: 78% of FIs and businesses call them essential. FedNow®, The Clearing House RTP®, and Zelle are favored; nearly 90% of FIs plan to adopt or already offer them. Irreversibility makes post-fraud recovery nearly impossible. Attackers use social engineering and account takeover (ATO). In 2023, 27% of firms using real-time payments reported more fraud — vs. 13% in 2020. Detection must be near-real-time.
Fighting fraud with AI/ML
71% of FIs now use AI/ML for fraud detection (up from 66% in 2023) — analyzing huge transaction sets in real time, flagging suspicious behavior, blocking before settlement; catching patterns humans miss. ATO is 52% of instant-payment fraud cases; AI/ML adapt as tactics evolve.
Third-party solutions
Benefits exist, but expertise and resources are scarce. 48% of fraud-prevention tech is built in-house — yet only 14% of FIs can build AI/ML solutions internally. By 2025, 70% of FIs will rely on third-party AI fraud tools. Form3 and Feedzai are advancing: in the UK they partnered on authorized push payment (APP) fraud detection by analyzing sender/receiver behavior differences — a case for external tech against real-time fraud.
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