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Payments in 2022: What Had Our Attention? Retail Payments Risk Forum Talk About Payments Webinar December 15, 2022 The views expressed in this presentation are those of the presenters and do not necessarily reflect the positions or policies of the Federal Reserve Bank of Atlanta or the Federal Reserve System. WEBINAR LOGISTICS • Have technical issues – Submit issue in chat in the webinar platform for assistance. • Ask a question – Click the Q & A button in the webinar platform and enter question. • Take the survey – We’ll send you a short survey immediately following webinar. We welcome your feedback. • Listen again – Recording, presentation deck, and transcript will be posted on the Retail Payments Risk Forum website in approximately a week (https://www.atlantafed.org/rprf.aspx). 2 RETAIL PAYMENTS RISK FORUM MISSION Research and Education Talk About Payments Webinars Payments Study Take on Payments Blog White Papers Consumer Payments Research Speaking Engagements 3 TODAY’S PANELISTS Nancy Donahue Dave Lott Jessica Washington 4 AGENDA 1 Payments Word of the Year 2 Payments infrastructure evolution 3 Business payments 4 Fraud collaboration 5 Audience Q&A 5 PAYMENTS WORD OF THE YEAR I N T M E T A V E R S E P R O P I R R E V O C A B L E R F R I C T A B I O O M N L E S S A Y A C S L I T Y I C H A N N E L 6 POLLING QUESTION Which of the following words gets your vote for the Payments Word of the Year? a) b) c) d) e) f) Frictionless Interoperability Irrevocable Metaverse Omnichannel PayFacs 7 EVOLUTION OF THE PAYMENTS SYSTEM 8 PAYMENTS SYSTEM EVOLUTION • • • • • • • Instant payments Same-day ACH Contactless payments Economic inclusion Open banking Debit routing Future technology 9 Payments Inclusion Cash Preservation Benefits of Digital Payments Ensure consumers are able to continue to use cash as a widely accepted means of payment. Understand the benefits, bridge the gaps, design and research inclusively. Optionality Ensure fair and equitable access to and use of payment options. Economic Resilience and Mobility Promote economic resilience and mobility through financial and payments inclusion. 10 MORE US CONSUMERS USE CASH THAN ANY OTHER PAYMENT INSTRUMENT Cash 85% Debit 67% Credit or charge 67% Online banking bill… — 21% used a prepaid card. 51% Check 46% Bank account… 39% Prepaid Money order — 85% used cash at least once in the past 30 days. 21% 6% Source: 2021 Survey and Diary of Consumer Payment Choice 11 PAYMENTS SYSTEM EVOLUTION • • • • • • • Instant payments Same-day ACH Contactless payments Economic inclusion Open banking Debit routing Future technology 12 BUSINESS PAYMENTS 13 BUSINESS PAYMENTS INNOVATION 14 BUSINESS PAYMENTS INNOVATION Source: The E-invoice Exchange Framework: Paving the Path to B2B Payments Modernization - FedPayments Improvement 15 BUSINESS PAYMENT INNOVATIONS Virtual cards Instant payments Omnichannel 16 RANSOMWARE TRENDS BY MONTH Source: BlackFogRansomwareReport-Nov-2022 17 RANSOMWARE ATTACK VECTORS Source: Coveware https://www.coveware.com/blog/2022/10/26/q3-2022-quarterly-report#payment 18 FRAUD COLLABORATION 19 PAYMENTS FRAUD • Fraud scenarios w/credit-push o Business email compromise o Vendor and payroll impersonation o Account takeover o P2P scams o Authorized push payment (APP) • Chargebacks and 1st-party fraud • Online fraud–eCommerce 20 20 NACHA’s NEW RISK MANAGEMENT FRAMEWORK AREAS OF FOCUS • Defining the role of the receiving account-holding institution • Enabling and providing information sharing among financial institutions • Expanding and improving end-user awareness and education OBJECTIVES • Increase awareness of fraud schemes that utilize creditpush payments • Reduce the incidence of successful fraud attempts • Improve the recovery of funds after frauds have occurred 21 FRAUD COLLABORATION • Interoperable network modeling • Attack exercises • • • • • Payment associations FS-ISAC Law enforcement The Fed Regulators 22 https://fedpaymentsimprovement.org/strategic-initiatives/payments-security/fraudclassifier-model/ WATCHING IN 2023 • Banking-as-a-service • Buy now, pay later • Consumer shopping • Gig economy • Instant payments • Master accounts 24 What questions can we answer? Click the Q&A button in the webinar platform to submit your questions. 25 Connect with us @Atlanta Fed Retail Payments Risk Forum 26