Kingsley Zeblon on LinkedIn: The several credit/debit cards you find at the dollar tree stores are all… (2024)

This past Monday morning, a considerable number of customers at leading U.S. banks such as Bank of America and Wells Fargo faced unexpected delays with their direct deposits. An ACH processing error, identified last Friday, has been the primary suspect behind this inconvenience.While the Federal Reserve has clarified that the issue is not a cybersecurity concern and has been resolved, the ripple effects continue to disturb customers who are still awaiting their paychecks.Transparency and communication are crucial in such scenarios. The Clearing House, which operates the U.S. private-sector ACH system, acknowledged a "processing error" that led to ACH payment instructions being sent out with masked customer details, thus causing delays. Efforts are being made in collaboration with the affected financial institutions and the Federal Reserve System to expedite the resolution process, with some delayed payments already processed.Customer-centric banks like have proactively stated their intention to post direct deposits as swiftly as possible and have committed to refunding any overdraft fees incurred due to this glitch.In light of these events, what steps do you think businesses and individuals can take to safeguard against the inconveniences caused by such technical issues? Are there contingency plans that you've found effective, or insights you've gained from similar experiences?#Banking #Fintech #DirectDeposit #ACH #CustomerService #DigitalPayments #PaymentProcessing #Worldline #cybersecurity

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A recent fraud faced by a P2P NBFC has unearthed a major loophole in the system for alternate investments, P2P lending and Save Now Pay Later platforms.First, let us understand how the user journey works for these fintechs and investment platforms: ☝ Users can invest in a scheme (say a P2P or save now pay-later) and make the payment for the investment through different modes (card, UPI, netbanking etc). On an average, more than 70% users transacting on payment gateways use UPI mode to invest✌ Users have the option to withdraw their investment at any point of time. They can place a request to the P2P or SNPL platform, and the platform makes a payout to the user's bank account - often real-time!Now, let us understand the loophole that resulted in fraudsters siphoning out Crores of rupees: Everytime you make a UPI transaction to a merchant, you as a user have the right to raise a chargeback request in case the services have not been fulfilled by the merchant or in case of a dispute 🙅♀️ . When you raise a chargeback, the merchant has to give proof 📃 to show that the services were actually provided to the user as per the TnC. If the merchant does not respond within a few days ⏲ , the payment authority (in case of UPI, it is NPCI), mandates that the chargeback case be closed in favor of the user. Essentially this means, the user gets his money back 💰. Fraudsters used this mechanism to their advantage! They created multiple P2P investment accounts, loaded small value investments through UPI on payment gateway. Then, once the money was loaded, they immediately withdrew the money AS WELL AS raised a chargeback on NPCI. The trick was to raise so many of these requests that the investment entity or platform would be swamped with chargeback requests and not be able to respond to each one of them on time. The result? For every INR 100 that the fraudster would 'invest' - he/she would withdraw INR 100 💸 💸 from the at-will withdrawal system, and also get INR 100 💸 💸 returned through chargeback - because the merchant was swamped with chargebacks 😰 and could not respond within the stipulated time given by NPCI. A 2X return scheme within a few days!!🤑 🤑 While the concerned entities are working towards plugging the holes, it highlights the importance of risk checks and mechanisms to avoid new ways of defrauding the system! India truly has the best, most advanced payment and fintech infra in the world, but the next wave of growth would be with a risk & compliance first approach, to stay ahead of fraudsters, who are getting smarter by the day.If you are looking to talk about anything payments, happy to chat!Edit: This post is not a critique of the UPI chargeback process - it is simply to highlight that in the age of providing instant gratification to customers by fintechs - the sync between chargeback and instant withdrawals/payouts is super critical to safeguard against fraudsters

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Fyi-something to watch especially for those in the stablecoin space or developing other types of payment rails using blockchain technology. Fed moves to slash debit swipe fees, setting up battle with banks By Katy O'Donnell | 10/25/2023 01:00 PM EDT The Federal Reserve on Wednesday proposed a sharp reduction in its cap on debit card swipe fees, in a blow to banks and a big win for retail merchants.Merchants pay the fees, which are intended to cover the costs incurred by banks for debit card transactions, every time someone uses a card to make a purchase.Under the proposal, the maximum fee for an average debit transaction of $50 would fall to 17.7 cents from 24.5 cents. The Fed is proposing cutting the cap after its surveys showed that debit card issuers’ costs have fallen for several years. Debit cards are the most popular form of noncash payment, according to survey data from 2021.The move caps a yearslong battle between banks and retailers that has drawn in lawmakers and armies of lobbyists. Retailers have long pressed the Fed to lower the maximum fee, and the Supreme Court has agreed to take up a challenge to the cap. Banks, meanwhile, are already poised for a legal fight of their own to retain the current fee cap.The Fed set the cap, which applies to issuers with at least $10 billion in assets, at 21 cents plus 0.05 percent of the transaction in 2011, after Congress passed Sen. Dick Durbin’s (D-Ill.) interchange rule as part of Dodd-Frank, the landmark law that rewrote the rules of Wall Street. The central bank then added a 1-cent additional charge for fraud prevention costs.In the years since the initial fee was set, based on transaction data from 2009, transaction processing costs have “nearly halved,” fraud losses have fallen and fraud-prevention costs have risen, Fed staff said in a memo accompanying the proposal.Under the proposal, the base component of the fee cap would be slashed to 14.4 cents from 21 cents and the transaction percentage would drop to 0.04 percent from 0.05 percent. The fraud prevention adjustment would rise to 1.3 cents from 1 cent.Lobbyists are bracing for litigation over how the cap ultimately settles. The American Bankers Association and eight other banking and credit union trade groups sent a letter Friday urging the Fed to leave the cap intact and to not be “misled” by merchant talking points.The proposal is the latest regulatory change to hit banks. Financial regulators on Tuesday approved a revamp of rules to increase lending in low-income areas, and they’ve proposed new higher capital requirements for the largest lenders.Fed Governor Michelle Bowman voiced opposition to the fee cap proposal in prepared remarks before the board meeting on the matter Wednesday.

The reason that Visa and MasterCard continue to be so successful today inspite of a wave of alternative payments technologies, isn't due to more technology! Instead, right from the very start, they chose to build a strong ecosystem where memberships to Banks and FIs are granted on the basis of a strong commitment to their operating regulations! When you have mature regulations on chargebacks, fraud, licensing, and a whole host of other items, including clear timelines and penalties for violations, it builds consumer confidence. UPI would do well, if NPCI were to implement a set of mature operating regulations along the lines of the card associations. Early days one may say, but a lot rides on how these op regs are set up. #payments #opregs

This week’s “The Scanner” includes; DOJ Seeks Jail Time for Ex-Wells Retail Banking Head Over Fake Accounts, CFPB Report Highlights Role of Big Tech Firms in Banking and Payments, CDIA Says CA Legislation Intended to Protect Consumers’ Data Will Backfire & Launches Campaign, X (Twitter) Gains Payment Licenses in 7 States, Mortgage Delinquencies & Foreclosures at Record Lows as Homeowners Stay and Pay Due to Record Rates, and more that mattered this week in consumer lending, compliance, and credit risk & reporting news.1) Catch up on all of this week's headlines https://hubs.la/Q021wjd802) DOJ Seeks Jail Time for Ex-Wells Fargo Exec Over Fake Accounts https://hubs.la/Q021vLLx03) CFPB Report Highlights Role of Big Tech Firms in Mobile Payments https://hubs.la/Q021vNCD04) Consumer Data Industry Association Launches Campaign to Highlight How California’s “Delete Act” Could Severely Harm Consumers https://hubs.la/Q021wl1k05) X gains payment licenses in seven US states https://hubs.la/Q021wmDn06) Mortgage Delinquencies Hover at Record Lows as Homeowners Stay and Pay https://hubs.la/Q021vZm-07) CFPB ‘quietly’ affirms support for HUD counselors partnering with mortgage originators https://hubs.la/Q021vKmx08) CFPB to Settle Employment Discrimination Case for $6M https://hubs.la/Q021wmFj09) Discover, bracing for FDIC penalty, adds ex-agency official to its board https://hubs.la/Q021vPDX010) Hedge funds drop short trades on US regional banks, Goldman Sachs says https://hubs.la/Q021w1Gp011) Interchange opposition, FOM modernization top CU priorities for rest of 2023 https://hubs.la/Q021wl0m0#banks #consumerlending #compliance #creditrisk #creditreporting #cfpb #fintech #news #industryupdates #TheScanner

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A recent report by JD Power says that 36% of all banking customers in the United States say they have experienced some kind of financial fraud in the past 12 months. One comment about crypto I have regularly heard is that "crypto is scammy." What this statement fails to expand on is that USD is used for scams too.Particularly interesting is that the JD Power report says 50% of customers under age 40 have experienced fraud in the past year, as these customers are more likely to engage in electronic transfers and, thus, are more likely to trust online requests for payments.So, I ask you a question - are scams a crypto problem or a systemic problem more related to the wave of FinTech and digital banking?

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New Post: Banks Should Have Better Customer Relations When Closing an Account - For most of the last year, my inbox has been overflowing with tales from people like these:Every person — more than 1,000 wrote to me and my colleague Tara Siegel Bernard — volunteered a story of losing banking and credit-card accounts and included contact information. It’s not the sort of thing most people normally do if they have something to hide.Banks say they need to close accounts they deem suspicious to prevent money laundering, fraud and terrorist financing. In addition, regulators are pressuring them to sniff harder for signs of dirty dealings.But there are many frustrating things about this phenomenon: The account closings often come without warning. There is usually no recourse, appeal or explanation from the bank. Sometimes you find out you have lost banking privileges when you’re buying food at the grocery store and your debit and credit cards no longer work.But losing your bank account isn’t just inconvenient. It’s scary. If you’re a small business, it disrupts your payroll and can damage your reputation in the community. Given no explanation, you wonder if you’ve been blacklisted or put on some kind of government watch list.A big part of the mystery with these shuttered accounts is why banks often treat people with such casual callousness as they examine their behavior and then show them the door.It doesn’t have to work this way. In the last few days, I asked Bank of America, Citibank, JPMorgan Chase and Wells Fargo about specific things they might do to make the eviction process different, without breaking any bank security laws.Wells Fargo declined to comment. The other three offered some glimmers of hope but no promises that they would make this process easier.For those who have been shown the door, why should the bank want to soothe their rattled nerves? There is no constituency for the financially damned.Here are five questions I asked the banks — and the actions I asked them to consider.1) Most customers don’t read their account agreements and have no idea that you can cancel those accounts at any time. When you contact them to investigate suspicious account activity, why not remind them of this to convey the seriousness of the matter?Several times, readers told us that they hadn’t taken their banks’ inquiries seriously, or found their questions overly intrusive. But many bank customers don’t realize that they lack an inalienable right to bank with any given company. Nor do they understand that banks have a legal obligation to know their customers.Customers may not understand that any time the bank gets in touch, it could kick them out if investigators don’t like what they hear. So they should immediately take the bank’s call seriously.Bill Halldin, a Bank of America spokesman, said the bank sometimes does make it clear how high the stakes are during such conversations. Jerry Dubrowski, a JPMorgan Chase spokesman,

#FedNow is launching later this week 🚀 - what does this mean?// Firstly, what is it? 🔎FedNow is a new payment infrastructure developed by the Fed that allows any financial institutions to provide 24/7, instant payments. This is similar to Faster Payments in the 🇬🇧 (launched 2008) and Pix in 🇧🇷 (launched in 2020). The Federal Reserve Board have been working on it since c.2019.// Why is the Fed launching it? 🚨 It’s pretty behind (clearly). But the US has a unique challenge of over 10,000 banks. All the big banks are already connected to RTP (privately owned by The Clearing House) but a large proportion of smaller banks are not.The economic case, especially for consumers, is that the average American is penalised $250 a year in overdraft fees due to late payment settlement – usually for small individual amounts of around $24. Banks make billions of dollars from these overdraft fees, something the Consumer Financial Protection Bureau (CFPB) has cracked down on since October 2022.// Doesn’t the US have other payment “rails” e.g. Real Time Payments (#RTP) and Automated Clearing House (#ACH)? 👪 It’s not all rosy, and not everyone is as excited as the Fed. For starters, at launch 3 of the largest banks are not connected (Bank of America, Citi and PNC) AND there is no way (currently) for a bank to originate a real-time payment on one rail and a bank which is not connected to that same rail to receive it. Anecdotally, as tranch adopts FedNow in addition to RTP in our checkout platform, the Fed’s focus has been on consumer not business payments, FedNow will not be a replacement for ACH debits.Finally, there are some pretty big risks highlighted out there 🚩🚩🚩// 1 - Systemic Risk 🏦 -> anyone remember the SVB bank run? Yup. That would have happened EVEN quicker - the run was definitely slower as wires never made it out the bank and ended up being “frozen” in the ether.// 2 - Fraud Risk 👮♀-> is faster always better? Fraud experts say no. With ACH you can reverse transactions, with FedNow - when it’s gone, it’s gone. The US banks will need to add in multiple screens of warnings for scam/unauthorized transfers, as they do in the UK, to prevent accidental, irreversible transfers.// 3 - Privacy Risk 🤖 -> many in the crypto community (yes), view FedNow as giving the government the equivalent power of a Central Bank Digital Currency (CBDC) where they can view the details of every transaction, given the US government unprecedented payment access. Will the CFPB regulate the Fed?😕 So, consistently faster payments across multiple payment rails feels both inevitable and “a good thing” both for consumers and businesses - money movement makes the world go round. But let’s be real - solving this problem now will create more problems later.What do you all think? Tagging some Fintech LinkedIn wizards: Alex, Jason, Medha, Oliver, Matt, Don, Stephany#FedNow #Finance #Innovation #Risks #Payments

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💳 Despite expectations of reduced spending amid rising interest rates, Americans have amassed $1.13 trillion in credit card debt as of Q4 2023. This surge in consumer spending has triggered an increase in fraudulent charges, chargebacks, and disputes across the payments value chain.📈 Americans reported a staggering $65.2 billion worth of disputed charges in 2023, emphasizing the urgent need for robust fraud mitigation strategies. 🗑️ The root cause of this dilemma? Bad transaction data. Poor data quality not only hinders fraud prevention efforts, it leads to cardholder confusion and false chargebacks. 🛠️ This is where we come in. By arming card issuers with real-time merchant intelligence, Spade empowers banks to better identify fraud, make informed decisions, minimize risks, and enhance the overall customer experience. 🔍 Curious to learn more? Dive deep into the intricate world of fraud mitigation and merchant intelligence with the latest edition of CardsFTW!https://bit.ly/3VZrRE3#Spade #MerchantIntelligence #FraudPrevention #CardMarket #Fintech #CardsFTW #RealTimeData #CreditCards #DebitCards #Fraud #FightingFraud

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With the rise of LendTech platforms, new age virtual Credit cards and abundance of easy loans from banks, there is a sharp rise on Application Frauds and stolen identities.To effectively identify application fraud, banks, fintechs should apply deep visibility into a range of critical indicators and implement robust fraud detection mechanisms. Here are key aspects and indicators that banks should closely monitor. Read more on our blogs by #Prove’s in-house expert Mary Ann Miller.To know more about Advanced Authentication Methods byProveIndia, schedule a meeting here :https://lnkd.in/ghs9MjDC#digitalidentity #Fintech #Lending #loans #frauds #applicationfraud

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