Fraud can be perpetrated in the form of deepfake videos or voice, with AI producing a clone of a family relative supposedly in an emergency and needs a cash transfer immediately. AI can write more convincing phishing emails, removing telltale signs such as broken English. AI can also fake images like a driver’s license to fool and scam people, according to an FBI report.

“Fraud is only going to get worse with the creation of generative AI,” said Mike de Vere, CEO of Zest AI, which leverages AI to help financial services firms make more informed lending decisions and mitigate fraud incidents.

According to a March 2025 report from the U.S. Federal Trade Commission (FTC), the amount of losses due to fraud hit $12.5 billion in 2024, up 25% from the prior year. More people also reported they lost money due to fraud: 38% last year compared to 27% in 2023.

Investment scams led people to lose the most money, totaling $5.7 billion, up 24% from the year before. The second highest were imposter scams, at $2.95 billion. However, imposter scams were the most commonly reported fraud, with online shopping fraud next.

Notably, consumers lost more money to scams through bank transfers or cryptocurrency than all other payment methods combined, the FTC said.

According to a PYMNTS Intelligence study in partnership with i2c, 28% of consumers have fallen victim to credit card fraud last year. Moreover, 37% said they were “very” or “extremely” worried about falling victim to such fraud, according to “Consumer Credit Economy: Credit Card Fraud.”

In an interview with PYMNTS, de Vere said fraud losses are projected to reach $40 billion by 2027. Fraud tools are becoming more accessible, he added, noting that for as little as $20, criminals can do things like create fake IDs and pay stubs.

Read more: 37% of Consumers Highly Concerned About Credit Card Fraud

What Financial Institutions Wrongly Believe

Based on his experience working with banks and credit unions, de Vere shared his insights on five myths about fraud prevention that could leave organizations vulnerable.

Myth 1: Small Banks Are Safe Against Fraud

The first misconception is that fraudsters only target major financial institutions. In reality, 8 out of 10 banks and credit unions, including smaller ones, reported fraud losses exceeding $500,000 last year.

“It disproportionately impacts smaller financial institutions,” de Vere said. “A fraudster going up against Citi’s IT team is probably going to be less successful than [targeting] a tiny credit union that outsources their IT.”

Myth 2: Transaction Monitoring Is Enough

Many institutions believe that monitoring individual transactions provides adequate fraud prevention protection. For example, looking at a customer’s credit card patterns to spot whether there’s a fraudulent purchase.

However, de Vere said this narrow approach misses the broader behavioral patterns that AI can detect. He shared this real-world example: A fraudster opened a credit card at a credit union, charging about $100 a month and paying it off regularly. By itself, this behavior doesn’t raise red flags. However, this criminal was doing the same thing at several credit unions, de Vere said. The individual eventually applied for and received personal loans, maxed out the credit cards and disappeared with the money.

Myth 3: Security Requires Friction

The third myth revolves around the idea that to be secure, a financial institution has to put the customer through several hoops such as asking for the answer to a security question and the like. It creates friction in the customer experience. These binary fraud systems — is it a fraud or not? Yes or no — can create problems unnecessarily, de Vere said.

He shared his personal experience of being flagged for ID fraud during an auto loan application simply because his last name was squished together. “An AI solution could have looked at my credit report and seen that … two of my credit cards actually have my last name smashed together, so it’s probably not likely that I’m a fraudster.”

Myth 4: Manual Reviews Catch Fraud

Humans are supposed to be the gold standard when it comes to catching fraud, but de Vere argued that they are only as good as their experiences. Moreover, manual reviews are limited by the reviewer’s experience within an institution.

In contrast, an AI model can consume trillions of points of data to identify patterns of fraud. “It’s so far beyond where a human can be,” de Vere said.

Myth 5: All Fraud Solutions Are Equal

The final myth is that fraud prevention solutions are interchangeable. De Vere said that many available solutions are incomplete, creating blind spots in security coverage.

He said a robust fraud prevention solution should offer probability scores rather than binary “fraud/no-fraud” decisions, be trained on comprehensive datasets and tailored to an organization’s needs and geographic location. This approach lets organizations identify local fraud rings and deploy appropriate security measures.

Advocatong for a collaborative approach to fighting fraud, de Vere said, “We need to be thinking less about it being a competitive issue and more about it being a collaborative issue.”

To that end, Zest AI has created a consortium to share fraud experiences, enabling AI models to learn from attacks on one institution to protect others in the same ecosystem.

The post GenAI Fuels New Wave of Sophisticated Financial Fraud appeared first on PYMNTS.com.

In the report “Bridging the Gap: Helping Acquirers Meet Evolving Merchant Demands,” done by PYMNTS Intelligence and Visa Acceptance Solutions, we found that among the most valuable range of services offered by acquirers has been their ability to bring emerging technologies to their merchant clients.

Resourceful Fraudsters

Fraudsters, of course, are nothing if not resourceful. They evolve with the times and harness everything from text-based scams to artificial intelligence (AI) deepfakes to ply their trade. Most acquirers have seen an increase in fraud, and have pointed to the bad actors’ use of AI, cyberattacks and data breaches to create new avenues of attack. 

None of this is to suggest that they are not fighting fire with fire. The research shows that the acquirers are investing in AI, data-driven analytics, and other technologies to bolster their own fraud defenses, particularly with riskier merchant categories, and to broaden the range of what they offer to merchants.

Minding the Gap

More than 4 in 10 acquirers in the eight countries we surveyed reported an increase in fraud over the last year, while only one-fifth cited a decrease. There’s a gap between smaller and larger acquirers. This rise is far more dramatic for small acquirers, where processing volumes are below the $1 billion threshold, with more than 7 in 10 experiencing increases in fraud rates and none of the firms surveyed reported decreases.

Of the acquirers who said that fraud was on the rise, 8 in 10 indicated faster payment speeds played a role, suggesting their existing anti-fraud systems and strategies cannot keep up.   

There’s an acknowledgment of the pressures that merchant clients face. Seventy-two percent of acquirers we surveyed said that payment and fraud management issues were among the key reasons companies were not able to meet their goals of offering consumers unified commerce.

“Of course, most acquirers have already implemented a range of fraud prevention technologies,” PYMNTS Intelligence wrote.  The most common features provided into the market include consumer transaction alerts, automated fraud responses, AI or machine learning (ML) systems, and fraud prevention APIs. Altogether, most acquirers — 8 in 10 — use these features.

But there’s a drive to embrace a greater range of advanced technologies. Only 55% of acquirers support biometric authentication, but merchants and their end users want those features, which can include fingerprint and facial scans. 

The acquirers are heeding the call, as another 23% of acquirers plan on offering biometrics. And drilling down a bit, 47% of acquirers don’t use GenAI but want to, and 53% say they use behavioral analytics, while another 30% say that there are plans in the works to use to offer those capabilities.

Most of these technologies are on offer from third-party providers, in modular form, so the acquirers who have near-term implementation plans (and those who have yet to have plans in place) would be able to get there with relative ease.

The post Acquirers Step Up Battle Against Fraud With GenAI, Biometrics Push appeared first on PYMNTS.com.

Yet, in a digital landscape increasingly fraught with sophisticated phishing schemes, brute-force attacks and data breaches, the onus still remains largely on those same individuals and business users to manage an ever-growing list of passwords.

According to a new report from PYMNTS Intelligence in collaboration with Arculus by CompoSecure, 65% of consumers struggle with remembering passwords, often resorting to risky practices such as credential reuse or relying on outdated systems like SMS-based two-factor authentication.

This glaring vulnerability is not just a nuisance for users, it can be a direct pathway for fraudsters. In fact, the report reveals that stolen or falsified credentials now account for 41% of authentication-related fraud cases, a problem exacerbated by consumers’ frustration with existing security protocols.

In today’s landscape of mounting dissatisfaction and insecurity, tap-to-authenticate metal payment cards are emerging as a promising alternative. Initially marketed as luxury items aimed at affluent customers, metal cards have gradually broadened their appeal by offering enhanced durability, perceived prestige and — most importantly — superior security features.

Read more: Banks Step Up the Fight Against Stolen Credentials

The Rise of Metal Payment Cards

Unlike traditional plastic cards, tap-to-authenticate metal cards are significantly harder to counterfeit or clone. The robustness of materials such as stainless steel, titanium, and even carbon fiber makes tampering considerably more difficult.

More importantly, many of these cards now come equipped with advanced fraud-prevention technologies.

Financial institutions, according to the PYMNTS report, have identified frictionless authentication, enhanced security, and premium benefits as the key advantages of these new tools. Specifically, 58% of banks report that tap-to-authenticate metal cards offer smoother authentication experiences, while 57% cite the cards’ luxury appeal and associated perks as essential to their adoption strategy.

But it’s not just about aesthetics or prestige. The physical nature of these cards, coupled with their tap-to-authenticate capabilities, presents a formidable barrier to many common types of fraud. Unlike digital passwords that can be compromised through phishing or brute-force attacks, a metal card requires physical possession, making unauthorized access significantly more difficult.

The integration of near-field communication (NFC) technology into these cards provides users with a seamless experience while maintaining high levels of security. Consumers no longer need to remember increasingly complex passwords or risk the weaknesses inherent in biometric systems that can be fooled or degraded over time.

Enhanced Security Meets User Convenience

From a usability perspective, tap-to-authenticate metal cards represent a perfect marriage between convenience and protection. Cardholders simply tap their cards to authenticate transactions or access accounts, eliminating the need for typing cumbersome credentials or responding to unreliable SMS codes. This ease of use, combined with the cards’ tangible heft, provides a sense of assurance that is difficult to replicate in purely digital solutions.

For companies seeking to differentiate themselves in an increasingly competitive market, metal payment cards represent an appealing opportunity. Their association with luxury and innovation not only appeals to affluent consumers but also allows banks to position themselves as forward-thinking institutions that are responsive to emerging threats.

The shift toward metal cards may not eliminate digital fraud, but it does offer consumers a more tangible, user-friendly approach to safeguarding their financial information. As the payments industry continues to innovate, the appeal of these cards is likely to expand beyond luxury markets to encompass a broader audience eager for a simpler, more secure experience.

Ultimately, the future of authentication may well depend on the balance between physical and digital solutions. As financial services increasingly shift toward a hybrid model that emphasizes both security and user experience, metal payment cards are well-positioned to play a central role in this evolving landscape.

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The data show that individuals are  67% more likely to use debit cards than credit for groceries; 39% of consumers used debit to pay for their most recent retail purchases vs. 30% who used credit.

Just as debit is favored by individuals … it’s also a favorite of fraudsters. And as a result, banks are losing money to fraudsters, but they’re hardly standing still and are using advanced technologies to beef up their own defenses. The paper check? Well, those age-old conduits of bank account data and personal information are top choices for criminals too, but the continued shift toward money made mobile across digital channels holds promise in blunting fraud.

The Rise in Fraud Attempts and Losses

A new report from the Federal Reserve estimated that last year, debit cards were among the most targeted payment methods for fraud, as roughly three-quarters of financial institutions (FIs) said debit cards were tied to the most frequent fraud attempts and dollar losses, up 6% over the previous year. The Annual Federal Reserve Financial Services Financial Institution Risk Officer Survey also said that the number of FIs with monetary losses as a result of check fraud grew by 10% year over year. Overall, debit card fraud was responsible for 39% of fraud losses by payment type, followed by check fraud at 31%.

“In addition to challenges with scams and mule accounts, traditional legacy fraud approaches like forgery, counterfeits, stolen mail and impersonating authorized parties were noted as primary drivers” of fraud, the report disclosed.

Research done in collaboration between PYMNTS Intelligence and Hawk has indicated that 43% of the fraudulent transactions that financial institutions report are authorized fraud. Hawk, for its part, said just this week that it had raised $56 million in new funding to enhance its artificial intelligence (AI)-underpinned anti-fraud technologies to help banks counter financial crime. Elsewhere, PYMNTS Intelligence, in combination with Arculus, has discussed the rise and appeal of tap-to-authenticate metal cards that use embedded chips to authenticate users when those cards are tapped on a smartphone.

The data show that fraud based on stolen credentials accounts for 41% of all fraud cases, which in turn helps boost the waves of attacks — and the success of those attacks — detailed in the aforementioned Fed study. PYMNTS Intelligence and Arculus have found that nearly 90% of FIs have reported an increase in credential-based fraud over the past year, highlighting the weaknesses of current authentication methods. And 76% of FIs believe the tap-to-authenticate cards could increase profitability by reducing fraud and enhancing the user experience.

Checkmate for Check Fraud?  

Check fraud is estimated to cost the economy at least $23 billion, and there are several initiatives in place to tamp down on their use. The Trump administration, as has been widely reported, has mandated that the Treasury Department stop sending payments out via check, or accepting check-based payments, within the next several months. B2B payments, especially, are still heavily steeped in checks, which facilitate 40% of commercial transactions. But Ingo Payments and PYMNTS Intelligence indicated in recent research that the shift to digital payments has helped stem the tide a bit (along with other benefits), as  digital treasury processes improved cash flow forecasting.

The adoption of instant payments, however, has seen a significant uptick among companies, with 77% of respondents utilizing this technology in 2024, up from 62% the previous year. The Fed study noted that instant/real-time payments fraud attempts and losses decreased 3% in 2024, and stated that “instant payments fraud attempts and monetary losses were reported as negligible.”

The post Banks Say Debit Card and Check Fraud Attacks Are Gaining Momentum appeared first on PYMNTS.com.

The Germany-based company says its Series C round, announced Tuesday (April 8), will help it finance further product innovation and fuel expansion efforts, especially in the U.S. 

“Hawk enables banks to move beyond the traditional rules-based approach to anti-money laundering and fraud,” the company said in a news release. “Traditional systems create significant problems for compliance teams, including huge volumes of false positive alerts that need to be reviewed, which in turn leads to staffing challenges and costs.”

The company added that criminals can also find ways to subvert the rules, causing illegal activity to be overlooked. Hawk says its artificial intelligence (AI)-powered tools can boost accuracy to uncover more financial crime, while reducing false positives.

“Every financial institution that wants to reduce compliance workloads and increase the accuracy of risk detection should be using AI to achieve those goals,” Hawk CEO Tobias Schweiger said in the release.

“The results are compelling — we’ve been able to increase alert accuracy to almost 90% in some cases, while significantly cutting false positives. We’re also uncovering twice as many previously undetected cases of ‘novel’ criminal activity.”

The round comes at a time when banks are calling for stronger anti-money laundering (AML) and fraud protections. At a hearing before Congress last week, witnesses from the industry called for a “whole government” approach to fighting payment and investment scams.

Darrin McLaughlin, executive vice president and chief AML and sanctions officer for Flagstar Bank, testified on behalf of the American Bankers Association, saying that 1 in 3 American adults had experienced financial fraud in just the past 12 months.  

“Bad actors have leveraged cutting-edge technologies, social media and telecommunications to target Americans’ life savings,” he told the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions.

“We need a strategic approach” that includes the banking industry, the government and other stakeholders, he said, and that “regulatory reforms let us focus on the real threat.”

Meanwhile, research by PYMNTS Intelligence shows that — in keeping with Schweiger’s argument — a majority of financial institutions (FIs) are using technologies such as AI and machine learning (ML) to uncover and prevent fraud.

“Protecting Accelerated Disbursements From Fraud,” a report compiled in collaboration with Ingo Payments, found that 71% of FIs were using AI and ML for fraud detection last year, up from 66% in 2023. These tools, PYMNTS wrote, can identify anomalies and patterns that might escape human analysts, allowing for faster decision-making.

The post Hawk Raises $56 Million to Help Banks Counter Financial Crime appeared first on PYMNTS.com.

Tuesday, (April 1), the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions held a hearing titled “Following the Money: Tools and Techniques to Combat Fraud” that delved into the rising costs of fraud, and the ways in which advanced technologies can be, and are being, leveraged by criminals and banks as they do battle with one another. 

But most witnesses charged that existing regulations have not kept pace with new attack vectors, and impose burdens on smaller businesses as they seek to comply with those regulations.

Subcommittee Chair Warren Davidson, R-Ohio, said in his opening remarks that the Federal Trade Commission has estimated that U.S. consumers lost $5.7 billion to investment scams last year.

“Criminals are increasingly finding ways to bypass U.S. financial regulations to scam Americans into draining their life savings for the sake of their own illicit gain,” he said.

Eyeing the Bank Secrecy Act

Separately, in demonstrating the scope of illicit activity, Kathy Stokes, director of fraud prevention at the AARP, said in her testimony that even the FTC has underreported the amount of money stolen annually; in 2023, there were reports that the money stolen from fraud topped $158 billion.

“These criminal enterprises leverage a vast array of tools to commit their crimes, including all methods of communication and forms of payment, complex impersonation schemes, anonymous shell companies, and human trafficking,” Stokes said. 

And Jacqueline Burns Koven, head of cyber threat intelligence for the blockchain data platform Chainalysis, pointed to the rise of pig butchering and other scams, but added that there are no mechanisms or obligations through which state, local and federal agencies share information with each other and with the private sector, while crypto firms and financial institutions share scam information to the agencies through suspicious activity and transaction level reports.

BSA Outdated?

With a nod to the Bank Secrecy Act, which has been in place for decades, Rep. Davidson said that the there must be continuous assessment of the tools — including suspicious activity reports (SARs, tied to transactions over $5,000) and currency transaction reports (CTRs, for transactions above $10,000) used to combat the fraudsters.

“The reporting burden keeps growing with no obvious improvement of effectiveness,” said Davidson who noted that the numbers have not been adjusted for inflation. “FinCEN [Financial Crimes Enforcement Network] estimated that an average total of 12,600 SARs and 57,000 CTRs were filed each day for fiscal year 2023.

“According to a December 2024 GAO report, law enforcement agencies accessed only 5.4% of total CTRs filed to FinCEN between 2014-2023. Not very efficient,” he said.  He urged that the thresholds be examined for (possibly higher) adjustment.   

Jeff Brabant, VP of federal government relations at the National Federation of Independent Business, urged lawmakers to repeal the Corporate Transparency Act, which he said exposes smaller firms to data privacy threats as they report beneficial ownership data to FinCEN.

“The federal database will be breached and it will be hacked,” he told the subcommittee. “This is why Congress and the Treasury must immediately and permanently delete the records of the millions of U.S. small business owners who already filed their [reports].”  He stated that the businesses — numbering about 33 million firms — are filing details that otherwise could be accessed by government agencies without subpoenas or warrants.  

In the meantime they tend to hire accountants or counsel to assist with the filings, which adds to operating costs and regulatory burdens, while fraudsters try to get them to share information through phishing and other scams that come from seemingly official communications or websites.

Strategic Approach

Darrin McLaughlin, executive vice president and chief anti-money laundering (AML) and sanctions officer for Flagstar Bank, appeared before the panel on behalf of the American Bankers Association, and said that 1 in 3 adults in the U.S. had experienced financial fraud in just the last 12 months.  

“Bad actors have leveraged cutting-edge technologies, social media and telecommunications to target Americans’ life savings,” he told the subcommittee. 

“We need a strategic approach” that includes the banking industry, the government and other stakeholders, he said, and that “regulatory reforms let us focus on the real threat.” 

Banks have embraced AML compliance and anti-fraud programs, he said, to detect anomalous patterns of fund flows. As for the SARs, he said, “By the time law enforcement receives the reports, it is often too late.”  He added that the “federal government has a database that is bursting with information that should be shared with the private sector.”

Although thousands of SARs are filed, he said, they may not in fact reflect illicit activity. “It would help banks to see analysis of these reports and other information the government may have.”

He advocated “meaningful reform” of the BSA, creating a more risk-based approach to AML, and streamlined reporting that allows banks to focus on higher risk-customers (especially when $10,000 is no longer an unusually large sum of money), where in his testimony he said that “BSA program rules should be amended to explicitly allow this reallocation of resources away from lower-risk and toward higher-risk customers and activities.”

During questioning, Davidson asked McLaughlin what has worked — and has not worked — as banks battle the fraudsters. McLaughlin pointed to a greater emphasis on education and “investment in advanced technologies” on the part of banks “to catch the fraud at the front door, as we call it, before they are able to transact with the institutions. There have also been advancements in the models and the scenarios for which we monitor customer behavior.”

Separately, Rep. Frank Lucas, R-Okla., asked about the burdens placed on small businesses for reporting, and Brabant said, by way of example, the mandate to report “substantial control” has been broadly defined: “So if you’re a restaurant manager and you have no ownership stake, you [still] may have substantial control. One of the challenges when you’re a small business owner is, ‘What senior staff do I have to put in?’ FinCEN doesn’t really define this, and you’re worried about going to jail for 10 years because you might not have put enough senior staff down.”

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This pledge, as the Financial Times (FT) reported Monday (March 31), comes as the U.K. government is facing calls to show more leadership in helping fight online scammers.

According to the report, the companies behind the pledge have transitioned from a testing phase to begin real-time exchanges of fraud indication data — unusual transactions, suspicious URLs — to detect scammers faster.

Among the banks involved are Barclays, HSBC, Santander and Lloyds, joined by tech giants such as Amazon, Meta and Google and telecom firms BT and Three.

The report cites data from the U.K, Office for National Statistics showing that fraud accounts for 41% of offenses in England and Wales, costing an estimated $8.8 billion per year.

“By making this pledge, our members are redoubling their efforts to create a safer environment for all businesses and consumers online,” said Ruth Evans, chair of Stop Scams UK, the group behind the initiative.

The group tried a data-sharing pilot in 2023, though the amount of information shared had been “negligible,” chief executive Mark Tierney told the FT.

The program has since changed “exponentially,” he added, crediting the introduction of an automated system that could transfer “tens of thousands” of data points a day between the three sectors.

The FT notes that this effort is separate from Meta’s data-sharing accord with NatWest and Metro Bank that has helped the social platform remove 20,000 scam accounts.

It is happening at a time when scams against banks and their customers have exploded, as PYMNTS wrote earlier this month.

“Fraudsters pull at human nature in a bid to gain access to accounts and drain them — pleading through texts, phone calls and artificial intelligence (AI) prompts for donations, romance, bail to get out of jail and more,” that report said.

“Scammers are industrious, becoming more businesslike, moving beyond blast emails toward a personalized approach as they pick their victims.”

Research found in the PYMNTS Intelligence report “The Impact of Financial Scams on Consumers’ Finances and Banking Habits” shows that there are two types of scams that cause more financial damage than average.

These are investment scams, which carry a median loss of $1,104, and romance scams (median loss of $1,996). In addition, romance scams also string victims along for an average of 3.6 transactions, which is nearly double the number of transactions involved in other methods.

The post UK Banks Agree to Improve Data-Sharing in Anti-Fraud Battle appeared first on PYMNTS.com.

These are just some of the findings detailed in “To Stamp Out Authentication-Based Fraud, Banks Want Metal Cards,” a PYMNTS Intelligence and Arculus collaboration, which revealed that a staggering 87% of banks have reported an increase in credential-based fraud.

As the level of sophistication available to bad actors grows, hackers and fraudsters are exploiting every vulnerability in password-based authentication. This can frequently mean banks are left playing catch-up.

The problem is simple: passwords are obsolete. Cybercriminals, armed with stolen credentials from countless data breaches, are gaining access to customers’ accounts with disturbing ease. Phishing scams, social engineering and credential stuffing attacks are running rampant. In some cases, criminals don’t even need to steal a physical card to drain an account, they just need a victim’s login details.

Enter metal payment cards, which are being positioned as the latest weapon in banks’ ongoing arms race against fraudsters.

Banks Battle Fraud Surge With Next-Gen Metal Cards

Metal bank cards aren’t just sleek, status-symbol cards reserved for the ultra-wealthy. The new generation of metal cards feature built-in biometric authentication and tap-to-verify technology, allowing users to approve transactions in real time. Think of it as two-factor authentication, but without the hassle of one-time codes or easily hackable passwords.

According to the PYMNTS Intelligence report, 77% of surveyed financial institutions are considering solutions like tap-to-authenticate as a powerful new layer of security.

The appeal is clear: Rather than relying on an easily stolen PIN or a hacker-breached password, customers will verify transactions with a physical card that requires their presence to function. After all, metal cards with authentication technology can act as a hard stop to many types of credential-based fraud. This added layer of security helps make it nearly impossible for cybercriminals to execute fraudulent logins or unauthorized transactions.

After all, the fight against fraud is turning into an arms race. As criminals develop more advanced hacking techniques, banks are under increasing pressure to innovate or suffer the consequences. Metal authentication cards and passwordless banking may be the only way forward in an era where passwords are more of a liability than a security measure.

As the financial industry races toward a future without passwords, security experts warn that speed is crucial. The faster banks move, the harder it will be for fraudsters to adapt and exploit new vulnerabilities.

Read more: Banks Step Up the Fight Against Stolen Credentials

Banks Are Putting the Pedal to the Metal on Security

PYMNTS Intelligence data finds that more banks prefer metal cards for tap-to-authenticate technology (41%) compared to plastic for the same use (25%). Banks more affected by fraud tend to have a stronger interest in metal cards and anticipate better impacts from adopting the technology.

Larger institutions drive adoption, with 69% of banks with over $100 billion in assets expressing a strong level of interest in metal cards. Add in the 23% of somewhat interested large banks, and the pool of large banks interested in metal payment cards grows to 92%.

Customers expect seamless and secure banking experiences, and delaying the move away from passwords could leave institutions lagging behind competitors that offer smoother, safer digital interactions. By proactively adopting cutting-edge security measures, banks not only protect their customers but also establish themselves as leaders in the industry.

The bottom line? If banks want to keep their customers safe, the days of relying on passwords are over. And for criminals hoping to exploit outdated security measures? Your time is up.

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FedNow® Service’s debut a year and a half ago, and traction gaining across The Clearing House’s RTP network (which recently crossed the 1 billion transaction mark) have given consumers and enterprises a broadening range of payments choice, where funds can be delivered in real time, instantly, without taking days to settle.

But for banks, along with the rewards of faster payments, there are risks too — and to keep their customers safe, they are leveraging high-tech tools to ward off the bad actors. Banks’ clients are aware of the growing arsenal that their financial institutions (FIs) can leverage, and they are willing, too, to endure a bit of friction (and they want some reassurance from their banks, too) in order to transact with a bit more confidence.

Fraud is on the upswing. As noted in the Ingo Payments/PYMNTS Intelligence report “How Faster-Payments Providers Are Reducing Fraud Risks” our data shows that a growing percentage of FIs are under attack, as the percentage of FIs experiencing increased fraud-related dollar losses rose from 29% to 40% year over year in 2024.

These attacks are varied, because the fraudsters are nimble and resourceful. The attacks range from simple scams to sophisticated deep fakes or waves of botnets.

Risks Abound

The risks are more than financial — for the FIs themselves, the seismic impact can extend far beyond the attacks themselves. It can take a lifetime to build a reputation, and the reputation can be in tatters in a matter of minutes. Customers can and will flee a bank if they feel they’re not being look after — and especially if they have experienced fraud themselves. 

And those that are being bombarded?  Well, that includes just about everyone. Studies show that 76% of U.S. consumers in 2024 received unsolicited communications via text, email or phone that they suspected to be scam attempts. Fifty-one percent of U.S. consumers reported having friends or family members who were scammed last year.

Data shows 75% of clients would switch providers if they perceive that their FIs’ fraud protections were inadequate. This means that banks must step up their fraud game, given the fact that within three years 70% to 80% of all FIs in the U.S. will have the ability to receive real-time payments; about 30% to 40% will have the ability to send them.

Another 55% of consumers say that security and privacy are among their top concerns — and 70% of customers say they are willing to spend “more time” on identity verification in order to make sure that funds are flowing and being received safely. 

The willingness to have stepped-up, tech-fueled defenses in place comes as, we found, three-quarters of global FIs are also actively employing artificial intelligence (AI) for fraud detection, while 74% are using the technology to uncover financial crime before the criminals make off with ill gotten gains.

The advanced technologies systems typically monitor customer behavior, flagging deviations that would in turn be used to introduce intelligent friction into the mix.  In that way, there would be benefits that run both ways: Customers would trust that their bank is delivering the top technologies to aid in their defense; while the FIs would gain from consistent dialogue that fosters greater customer loyalty.

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The company’s scam disruption practice, announced Tuesday (March 11), part of Visa’s Payment Ecosystem Risk and Control (PERC), which itself blocked $40 billion in attempted fraud in 2024.

“Visa has invested over $12 billion dollars in technology over the last five years, including to reduce fraud and enhance network security,” Paul Fabara, chief risk and client services officer at Visa, said in a news release.

“At the same time, we have made a significant investment in our best weapon against scammers: our people. By combining our proprietary technology with the unique experiences and perspective our talent brings, we can more effectively identify and defeat even the savviest scammers.”

According to the release, Visa Scam Disruption (VSD) includes a “cross-disciplinary team” that deploys strategies to mitigate a range of scams. The unit also conducts “proactive” scam investigations to identify and address scams before they hurt consumers.

In addition, VSD employs generative artificial intelligence (GenAI) tools that can help “identify complex relationships and parse through mass amounts of data to identify true positive and impactful scam activity.”

Meanwhile, PYMNTS wrote last week about an explosion in scams against banks and their customers, with criminals turning to new technologies and old-fashioned manipulation.

“Fraudsters pull at human nature in a bid to gain access to accounts and drain them — pleading through texts, phone calls and AI prompts for donations, romance, bail to get out of jail and more,” that report said.

“Scammers are industrious, becoming more businesslike, moving beyond blast emails toward a personalized approach as they pick their victims.”

Research by PYMNTS Intelligence — from the report “The Impact of Financial Scams on Consumers’ Finances and Banking Habits” — found that two types of scams cause more financial damage than average. 

In first place are investment scams, which have a median loss of $1,104, followed by romance scams, with a median loss of $1,996. 

“Romance scams also string targets along for an average of 3.6 transactions, which is nearly twice as many as other methods,” PYMNTS wrote.

This week also saw new findings from the Federal Trade Commission (FTC), showing that consumers reported more than $12.5 billion in fraud losses last year. That’s a 25% uptick over 2023, driven not by a rise in the number of reports but an increase in people who reported losing money to a fraud or scam.

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