Consumer services

Mastercard says real-time payments increase risk of fraud

These include “chargebacks” to retailers for fraudulent transactions and allowing consumers to be compensated if goods are ordered with a credit card but not delivered.

“What we’ve seen around the world is that as account-to-account systems go real-time, money moves faster, but so does fraud,” said Richard Wormald, president of the Australasia division of Mastercard.

Consumer Protection Regime

“We know that scams are a major problem in many markets with real-time payments, and we expect them to become a bigger problem here. We can put in place a consumer protection regime without seeing the cost of fraud and cyber increase, which will better protect merchants or banks.

Global card schemes have also created detailed processes to manage liability and settlement risk, as well as cyber risk and fraud management services – effectively insurance policies that allow consumers to make transactions with confidence. They control consumers and merchants when they enter the networks and block the transactions of bad actors.

Mastercard said many of those protections could be lost when moving to direct account-to-account payments through NPP, and it wants to provide them — for a fee to be paid by banks.

Mastercard will develop a “pay by account” button for merchant sites or mobile apps to allow payments to be made using the existing direct entry system or NPP. It plans to allow merchants and banks to select the payment channel.

Pricing for banks to add account-to-account services has not been finalized, but it will likely be a flat fee per transaction, making it relatively attractive for larger transactions. The service, which Mastercard has developed with Canadian fintech EonX and Cuscal, will launch in the second half of this calendar year.

Mastercard is a $320 billion giant listed on the NYSE. Its stock is down 10% year-to-date, like Visa, which is down 7%; both are relatively resilient against another payment stock, PayPal, which has halved over the same period.