Jan 07, 2014 Dave King
The Federal Trade Commission and Consumer Financial Protection Bureau have been exceptionally active in the pursuit of electronic payments fraud throughout the past several years. Identity theft stemming from data breaches, as well as ACH cards and wire transfer-based fraud, have had a negative and massive impact on the overall economy, and regulators are hoping to correct this issue with more comprehensive and modernized laws.
Now, other regulators, including those within the financial services sector, are starting to make some noise as well.
Fredrikson and Byron P.A. recently reported that the Federal Deposit Insurance Corporation (FDIC) is expected to continue to intensify its scrutiny of third party payment processing companies, and that this will likely impact a variety of market segments in both positive and negative fashions. The massive growth of electronic payments capabilities, including mobile and prepaid card processing, has led to an increased need for government reforms.
According to the firm, the FDIC is expected to tighten its grasp on the payment processing industry through demands for enhanced due diligence and enforcement of activities perpetuated by third party vendors. What's more, the FDIC has also announced that it intends to increase monitoring processes that will work to reduce the amount of fraudulent occurrences stemming from ACH cards and wire transfers.
The source noted that banks and other financial services providers will need to amend policies ahead of legislation passed by the FDIC and other regulators to avoid fines, security risks and other issues.
Although the government has become more active in this arena, businesses still have a lot to gain from modernizing their payment processing capabilities. Electronic payments have been found to drive customer engagement and loyalty, and can also reduce the amount of annual expenditures needed to maintain accounts payable and receivable productivity.