90% Link Fraud Infrastructure to Faster Customer Onboarding

Fraud prevention is no longer a cost center, and for many firms, has become an investment with a measurable return.

“Payment Protection: Why Firms Still Aren’t Real-Time Ready,” a PYMNTS Intelligence report produced in collaboration with Plaid, finds that companies modernizing payments report lower fraud losses, fewer failed payments and reduced operating costs. The report draws on a double-blind survey of 150 senior executives at mid-market and enterprise firms in seven industries that move large volumes of money. Nearly all respondents, 99%, said modernization reduced total operating costs in some measure, with an estimated average decline of 8%.

 Fraud savings extend across operations.

• Sixty-eight percent of firms cited lower fraud losses after modernizing their payment systems. The same share reported savings from fewer payment failures and returns.
• 76% reduced manual review and workload.
• Another 66% saved through faster reconciliation and reporting.

 The technology can work like a better set of traffic signals, directing risky payments toward more scrutiny while allowing legitimate transactions to keep moving.

Real-time verification improves detection speed. Among firms that verify account ownership in real time, 60% detect fraud immediately or within minutes. That compares with 39% of companies that don’t verify ownership in real time. Firms using the capability were also more than twice as likely to catch fraud before money moved, at 21% compared with 10%. Faster detection is especially useful for real-time payments, which generally can’t be reversed after settlement.

Customers see a return, too. Eighty-seven percent of executives linked modernized payment infrastructure to fewer customer-service inquiries and the same share reported fewer late or missed payments. Eighty-three percent cited higher customer satisfaction, 81% saw fewer payment complaints and 80% reported stronger retention. Those gains can turn fraud controls into part of the customer experience instead of a source of added friction.

The progress comes with a sizable opening for improvement. Fifty-seven percent of firms said fraud attempts increased during the prior year, while 47% couldn’t detect suspected fraud in real time or within minutes. Just 49% use secure bank connectivity to generate real-time fraud signals from account activity, even though nearly all firms already have that connectivity.

Companies plan to close some of those gaps. Over the next 12 months, 70% expect to adopt or expand payment reconciliation automation, 65% plan identity verification and know-your-customer automation and 59% plan secure bank connectivity or artificial intelligence-based fraud detection. The figures are self-reported, but they show that fraud controls can produce benefits well beyond avoided losses. For many firms, the tools are already available. The next return will come from putting them to broader use.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.