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Automated electronic payments continue to evolve

Sep 20, 2013 Dave King

The electronic payments revolution has intensified substantially in a relatively short period of time, largely driven by the massive increase in smartphone, tablet and portable computer popularity among consumers. Now, automation has served as the next step in payment processing, with more businesses and public sector organizations making the jump toward ACH cards and wire transfers.

While these new capabilities have no doubt improved efficiency when it comes to accounts payable and receivable, the threat of cyber attacks has expanded rapidly in light of more activity in this market. Organizations of all kinds need to ensure that oversight practices are stronger than ever before when implementing automated electronic payment processing strategies.

ACH is here to stay
American Banker recently listed several predictions for the use of ACH cards among financial services providers and businesses in the United States. Regardless of whether a firm is a traditional bank or vendor of alternative financial services, automation has become far more commonplace because of its direct cost benefits and ability to attract new clientele.

According to the news provider, consumers are now demanding the ability to automate payment processing capabilities, such as regular bill pay activities. As a result, financial institutions and businesses are enabling these actions through the use of advanced payment processing portals that can be set up once and left to continue transferring the funds at the same time each month.

The source explained that while banks have been quick to launch these services, businesses remain a little more reluctant because of cash flow concerns and worries related to financial data security. Additionally, regulatory entities such as the Securities and Exchange Commission have increased efforts to control the use of these technologies among both financial institutions and businesses.

However, American Banker explained that direct debit and other types of ACH cards are growing in popularity among companies, especially those in the retail sector. The news provider cited one study that found ACH-based commerce has increased by 30 percent since 2004, and is now beginning to grow even more quickly as decision-makers become more comfortable with the management process.

Finally, the source added that consumers and businesses will likely continue to become more interested in ACH payment processing in the coming years, while financial service providers will need to improve security practices to avoid breaches.

All about oversight
The worst thing a company can do is to simply set up an automated payment processing account and never look at the associated activity again. Just because the payments will be transferred at the regularly scheduled time does not exonerate the business from keeping an eye on the activity on a monthly or even weekly basis.

The most damaging occurrences of ACH card and wire fraud, as well as identity theft, are those that go on for months and years without being noticed. Companies should ensure that the most effective firewalls and other data security software are implemented, and that trusted members of staff are tasked with keeping a close eye on activity within these accounts to avoid costly fraudulent actions from striking under the radar.