The afternoon sessions in the main stream focused on strategising for instant payments and financial crime.
The first panel, 'Implementing Instant Payments: Strategies and Challenges', was moderated by Rita Camporeale, European Payments Council, and featured the following speakers: Anne-Fleur Felissent, Société Générale; Arantza Yague, HSBC; Craig Ramsey, ACI Worldwide; and Katja Heyder, EBA Clearing.
Camporeale began by outlining the Instant Payments Regulation and the urgency it imposes on European organisations as we have already passed the first deadline. The new version of the SEPA Instant Credit Transfer (SCT Inst) scheme will come into force on 5 October 2025, along with the Verification of Payee (VoP) scheme, meaning financial organisations have a full schedule in the upcoming five months. So how have organisations approached implementation?
Felissent outlined three steps with which Société Générale approached their own implementations of various transformation projects: First, the design of the offer and addressing the customer journey, meaning the app, banking tools, and end to end processes. Second comes the technical integration, ensuring the real-time checks and fraud filtering, as well as the interfacing and connection of the APIs. Lastly, testing.
Yague highlighted the difference between retail and corporate that she’s observed. “Firstly, the pricing is going to make corporates more keen to make use of instant payments. Equally, the fact that there is no €100,000 cap is going to allow them to make treasury payments of any amount, but the corporate journey is very different to that of the consumer. Crucially, it’s going to be more of a file journey.”
Ramsey highlighted his perspective on industry adoption and readiness as a technical service provider. “By 2028, we’re expecting 13% of all payments in Europe to be instant payments. It’s not just about preparing for the IPR, it’s about truly understanding what’s going to change in the business as we move forward in terms of actual readiness. I’m going to go out on a limb here: I don’t think most banks have implemented a solution for IPR that will still be around in three years’ time. I think many have put sticking plasters over their systems in order to be compliant.”
Heyder of EBA Clearing gave insight into what has happened since the first IRP deadline, including the ability to receive instant credit transfers among others, has passed in January of this year. “You can see the increase accelerating, and you can see the first impact of the IPR. However, the SCT Inst is still growing itself, so I don’t think we can really talk about a migration. Individual banks are on their way, but it’s not yet an industry migration.”
An open-ended poll question revealed a mind-map of the audience’s most prominent challenges of implementing instant payments. Liquidity, fraud prevention, VoP, and fund recovery emerged as the biggest struggles.
Felissent commented: “I would have also chosen liquidity as one of the main challenges, especially when the cap on instant payments will be removed. Today, banks do not have 24/7 access to their liquidity in central banks, so there is the issue to source this liquidity. In addition, the account dedicated to instant payments is not remunerated,” adding an extra layer of complexity for treasurers when it comes to optimisation.
The other large issue that PSPs are facing is fraud. Ramsey emphasised that the rise in fraud is not because of instant payments per se, but because of the nature of fraud in itself. “We see fraud focus on instant payments because it’s a new thing. Whenever a new scheme has been launched, suddenly there’s fraudulent activity there. A lot of people say you need to educate the populace, but that’s not going to help. The populace always thinks its educated right up until the point they realise they’ve become a victim of fraud.”
And while VoP is one measure to help with fraud prevention, it will not solve the whole fraud puzzle. “We’re seeing that fraud in SCT Inst is nine times higher than in SCT,” Heyder commented. “The [VoP] deadline is the first challenge, because October is just around the corner. But VoP in itself will not stop fraud. Looking at the data, 10% of fraudulent transfers would not pass VoP, but on the other hand, 50% of fraudulent transactions would pass VoP. The challenge banks will face is how to keep the good friction.
The question of fraud prevention strategies was then picked up by the next panel.
Financial crime and fraud in payments
As financial crime evolves, so must payments security. Moderated by Deepa Sinha, BAFT, the panel titled 'Financial Crime and Fraud in Payments' featured Damien Dugauquier, iPiD; Evert Vandenbussche, KBC Global Services; Monika Jacob-Schnitzius, Deutsche Bank; and Olivier Jolyon, EBA Clearing.
Jacob-Schnitzius began with a short summary of how financial crime has evolved over the last five years. What we have been experiencing, is “a fundamental change in which crime, including financial crime, is committed. Financial crime is being shaped by global instability, market uncertainty, digitisation, and emerging technology. Digital platforms and technology are facilitating criminal systems. You can even say that a shadow industry has developed over the years, with professional fraudsters developing methods to steal data and sell it. The fact that a term like ‘fraud as a service’ exists speaks for itself.”
"I reside in Singapore, where people have lost the greatest amount of money to scams in recent years," Dugauquier explained. The average monthly income for each citizen is about $4000 per year. In reality, it is quite common in life. What has changed, since it used to be different? Covid has, for one thing, eliminated the worry of making online purchases, which criminals are taking advantage of. However, the primary reason why criminals find it so appealing is because the economic justification is too strong. Scammers have established scam centers that are also connected to other forms of crime, such as kidnapping and human trafficking, and are not located in Singapore.
The growing difficulty in spotting deepfakes has emphasized the intricacy of generative AI, according to Vandenbussche. “Working together, making use of services like FPAD, to share data and intelligence” is one way to combat this effectively. We must look beyond the confines of the transactions we observe occurring within the purview of our responsibilities.
Jolyon stressed the need for "AI models that will help detect fraud and patters very early in the game. " With FPAD, we're doing exactly that: identifying patterns and providing data to banks, which may then utilize it in their own fraud detection systems. Technology will be essential for coordinating all that data, which will then be shared as the following step.
However, the panel emphasized regulatory barriers to successful data sharing, specifically the trade-off between data security and fraud prevention. "We often like to blame the banks for everything, but it's not fair that banks are caught between data privacy and then also becoming more liable for fraud," said Dugauquier. If banks should safeguard their clients, we must also give them the ability to share more information in order to do so.
The topic of accountability was brought up, and the discussion centered on the shifting liability for authorized push payment (APP) fraud. "APP fraud payments are fundamentally based on social engineering, which is why it's so difficult to catch," Vandenbussche emphasized. "On a European level, I understand we want to make banks more liable, and I do think they have a role to play in that. Additionally, many of these frauds are happening via social media, so many other industries ought to take precautions to avoid this level of fraud. You can't manage that on your own as a PSP.
In conclusion, the panelists concurred that the future of fraud detection lies in industry collaboration and technology. "Fighting financial crime and fraud is no longer a competitive advantage," JacobSchnitzius said. A cooperative partnership between banks, business, and government is necessary.
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