Even in today’s modern times, an era filled to the brim with fintech that makes everyday financial transactions safer and easier, paper check fraud remains a persistent threat. In fact, check fraud even continues to rise year over year, making paper checks the No. 1 most vulnerable payment method available to businesses and consumers.
The factors in this continuing problem are complex and varied. As technology advances, criminals have easier and more affordable access to the tools they need to create incredibly authentic-looking counterfeit checks. Mail theft of paper checks also remains high, having experienced an uptick during the pandemic. Some criminals are adept at social engineering techniques to scam consumers into sending paper checks as well.
The Risk: Stacks of Losses
Risks to the consumers and businesses that use paper checks have never been higher. Despite these risks, checks are still commonly used among consumers, and as much as 42% of all business-to-business transactions are still made by paper checks.
Likewise, the risk of check fraud is tremendous for financial institutions. Up to 74% of businesses in the U.S. reported check fraud in 2019, resulting in staggering losses into the tens of billions. For every dollar lost to fraud, financial institutions spend another $4.36 in expenses related to recovering from the incident, such as legal fees and additional payroll. Moreover, financial services customers want a better and safer alternative to paper checks, with many prepared to switch financial institutions to get it.
The Fix: Fintech
In order to help financial institutions avoid or mitigate these risks, the first step is to shift the financial services industry away from vulnerable paper checks toward safer payment alternatives.
As peer-to-peer (P2P) payment technology matures with the introduction of tools embedded within a financial institution’s digital banking, this type of fintech offers a compelling solution. As a new generation of P2P, Neural Payments’ white-label solution offers consumers and business customers an easier and safer alternative to writing and mailing paper checks. By eliminating the card registration requirement and other vulnerabilities that have plagued third-party P2P platforms in recent years, Neural Payments offers a more secure P2P experience. Additionally, the Fraud Rules Engine leverages real-time automation to lock down, evaluate and respond to suspected transactions for an extra layer of security.
Users of Neural Payments don’t sacrifice convenience for safety. By eliminating the need for coordinating apps, consumers can make P2P transactions right in digital banking to move money safely, inexpensively, and through the broadest possible number of P2P networks without having to coordinate third-party platforms.
Financial institutions can leverage Neural Payments P2P to help significantly reduce check fraud and associated costs, but that’s just the start. When financial institutions offer an enhanced digital banking experience that engages their consumers every day, they are also building loyalty and brand value — as well as reducing transaction costs and growing deposits.
With the right fintech, check fraud can finally meet its match. To learn more about Neural Payments, visit neuralpayments.com, request a demo or contact us today.
