Real-Time Money Movement: Dispelling the Myths and Embracing the Opportunities

Real-time money movement (RTMM) is gaining traction worldwide. Although real-time payments only account for only a 1.2% share of the total payments volume in the US in 2022, transactions are expected to grow 364% by 2026¹. As more businesses and consumers expect faster, more efficient payments, this trend will only grow, with McKinsey predicting that by 2027, more than half of all payment transactions will occur in real-time (a threefold increase from today). For financial institutions (FIs), RTMM’s explosive growth is an opportunity to grow their revenue and capture new customers (86% of whom see value in RTMM²). The biggest roadblock to this growth has been outdated mindsets, roadblocks keeping FIs in the United States from getting on board and adopting this potentially lucrative payment system. FIs have been reluctant to adopt RTMM solutions based on a few commonly held misconceptions. They include the beliefs that:

• RTMM leads to increased fraud risk
• There’s a lack of consumer interest in real-time payments
• There’s no risk in waiting to adopt, and high-risk in early adoption

These common beliefs cannot be further from the truth. Subscribing to these misunderstandings can lead to disastrous results. In today’s rapidly evolving payments landscape, standing on the sideline endangers FIs, which could lose their competitive edge as well as a significant portion of potential market share. So what is the truth about RTMM systems and its incorporation into both the financial and fraud landscapes? NeuroID’s guidebook, Three Common Myths About Real-Time Money Movement & Fraudand How They’re Hurting Your Revenue, aims to dispel commonly held myths and discover the truth behind RTMM and fraud.

Does RTMM Adoption Lead to Increased Fraud Risk?

Fraud experts still hold on to the belief that faster payments can lead to faster fraud. And it’s an understandable fear: with no way of recovering money lost in real-time, RTMM systems seem especially scary. Fraud involving authorized push payments (APP) is on the rise as the immediacy and finality of these payments give consumers a much shorter timeframe in which to dispute or revoke them³. But it’s not the speed that makes RTMM vulnerable, but the outdated fraud prevention systems that simply can’t adjust to new styles and speeds of bad actors. Reactionary responses and manual work can’t fight real-time, instantaneous threats. As funds funneled through RTMM move faster, fraud solutions must keep up the pace. This means employing fraud prevention orchestration technology that reduces manual operations and can make more deterministic decisions higher in the fraud capture funnel. Switching to real-time fraud prevention automation makes the process simpler, repeatable, and more accurate—enabling FIs to capture both the fraud and opportunity that comes with RTMM systems.

Do U.S Consumers Actually Care About Real-Time Payments?

Data highlighted in the NeuroID report reveals that only 18% of banks and 12% of credit unions actually provide RTMM services, paving the way for the argument that consumer demand is lacking. However, Generation Z is leading the way in the world of faster digital payments. In fact, 66% of that cohort use digital wallets in virtually all cases. Plus, 51% stated that digital transactions will soon displace physical transactions. Furthermore, across various generations, close to 80% of consumers want to make payments to businesses directly and quickly. These stats clearly show that U.S. consumers, regardless of age, desire to make real-time payments as it enables them to send and receive money quickly as well as have more control over their finances. The rise and popularity of peer-to-peer payments (P2P) are also indicative of this consumer desire to access real-time payments. Some of the most popular providers include Zelle, Venmo, Visa Direct, and Mastercard Send. The new launch of FedNow is going to continue to fuel this consumer demand. But P2P platforms have not been without controversy. Zelle has been in the headlines for a lack of consumer protection against fraudulent transactions. Zelle’s parent company, Early Warning Services, reported that Zelle users have lost approximately $440 million to fraudsters. Despite the lack of fraud protection, customers continue to use this platform for sending money instantly and irreversibly. Convenience is the deciding factor. For FIs, RTMM systems aren’t just about meeting an immediate consumer demand—they’re about securing a future customer base. With Gen Z exhibiting high loyalty towards FIs they trust, meeting their needs with RTMM adoption means establishing a long-term customer base.

RTMM Is a Must to Stay in the Game

RTMM is not just another strategy. It’s a competitive necessity. Traditional banking services such as ACH payments and wire transfers still have their place, but for some consumers, they are simply too slow for the rapidly evolving payments landscape. Such services can take hours or even days for funds to clear. This is no longer a viable option for those consumers who want faster payments and immediate access to their funds. RTMM systems are still developing, and some financial institutions don’t want to take unnecessary risks when it comes to implementing them. But with 15% of consumers saying RTMM availability would be a top factor in changing banks, waiting is also risky. If you competitors have a more aggressive timeline than you do, you’ll lose real revenue: it’s as simple as that⁴.

Behavioral Analytic’s Place in Combatting Real-Time Fraud

Another issue driving hesitancy among FIs is updating fraud prevention legacy infrastructure and technologies. Revamping these systems to facilitate and support real-time payments could take considerable time and expense. But it doesn’t have to be an all-or-nothing approach: there are real-time fraud solutions able to keep up with RTMM-based fraud that don’t require a rip-and-replace, and can instead work as a new, unique signal within your fraud stack. When it comes to tackling the potential for fraud head-on, financial institutions must partner with a solution provider that leverages behavioral analytics to detect incidents of fraud. Within it’s role as a behavioral analytics leader, NeuroID is breaking down barriers and enabling safe and secure RTMM adoption. A pioneer in the realm of behavioral analytics, NeuroID detects the intention of users through their online behavioral patterns. NeuroID alerts to fraudulent activity by differentiating between legitimate users and potential bad actors based on form interactions (such as swipes, clicks, and name entries). All decisions are enacted in real time for the safer integration of instant payments. NeuroID’s solution is lightning-fast, with the ability to approve, deny, and review transactions in less than a second.

Closing Thoughts

RTMM will soon be table stakes for FIs. Although adopting RTMM without inviting fraud does have challenges, they are not insurmountable. With RTMM fraud, time is of the essence. It is critical to have a solution that can make real-time decisions on who is trustworthy, and who is treacherous. Behavioral analytics are a game-changer to ensuring proactive prevention in real-time. Leveraging the power of behavioral analytics, FIs get the information they need to streamline decision-making and avoid fraud costs, while still reaping the benefits of RTMM adoption.