Banks delay instant money transactions to prevent rising scams
- Replies 11
In an era where convenience is king, instant transactions have become the norm.
However, this immediacy has also opened the door to a surge of scams that have already left many Australians out of pocket.
In response, banks are now considering slowing down the speed of transactions to help combat this growing issue.
Australia's banking sector is planning to put 'sand in the gears' of its real-time payment system, a move that could see the immediacy of money transfers reduced.
This decision comes as the Albanese government prepares to conclude the consultation process of its Scams Code Framework next week.
This critical piece of legislation aims to create a digital 'ecosystem' involving banks, telecommunication companies, and social media platforms, acknowledging their collective role in the chain of scams.
Financial Services Minister Stephen Jones said: ‘I look at this like a disease.’
'Unless we get various parts of the ecosystem working together, we won't be able to beat it.'
With Australians losing over $3 billion to scammers in 2022, the proposed laws will set minimum standards of conduct for digital players, clarifying each company's role and responsibility in preventing, spotting, and responding to scams.
‘These are sophisticated, multinational operations,’ Jones said.
‘The people involved are more likely to have a psychology degree than a prison sentence. And we’ve got to have a sophisticated operation to go after them.’
The proposed laws will also include a landmark principle: any company found to be in breach of the code will be liable for compensation.
This change aims to prevent banks and customers from bearing the cost of scams and fraudulent activities.
It's a departure from the British model set to take effect later this year, which requires banks to reimburse fraud victims for their losses unless it can be proven that the victim acted 'with gross negligence'.
However, Australian banking executives are concerned about a system focused on compensation instead of prevention.
‘Scams don’t come to customers through their banking apps. Scams come to customers through their SMS messages (and) through their social media, like Facebook,” said Australian Banking Association CEO Anna Bligh.
She described the UK model as a ‘honeypot’ for criminals.
‘It sounds very simple, doesn’t it? If you fall for a scam, the bank will just pick up the tab,’ she said.
‘I think there is a very good reason why no country anywhere on Earth has followed the United Kingdom in this regard, and that’s because it has made them a honeypot for scammers.’
The Australian banking sector has been proactive in reducing risk.
The Australian Banking Association (ABA) announced a $100 million overhaul of online payment systems aimed at improving the safety of transactions and protecting the public from the sly tactics of fraudulent activities.
ABA said that community-owned banks, credit unions, and commercial banks were ‘joining forces’ to address scammers with the Scam-Safe Accord.
Banks are rolling out a new system to match accounts with BSBs, preventing scammers from intercepting transactions between a payer and a payee.
Banks will also have a greater ability to veto payments to suspect 'high-risk' crypto accounts.
Bligh admitted that it was ironic that the industry was now looking to slow down its successful real-time payment system.
'If you're transferring money to someone you have never sent it to before and it's a particularly high amount, a number of banks are now looking at slowing that process down,' she said.
'Maybe holding (it) for 24 or 48 hours.'
This move has the support of David Lacey from IDCARE.
‘Forewarning consumers to say, “Hey, more friction is on the way, but we don’t lose half a billion a year.” I think that might be worth it,’ he said.
He's keen to see biometric measures applied when opening and shifting money between accounts, including fingerprints and facial recognition software.
‘It’s an arms race. Over time, you can expect criminals will adapt,’ he said.
‘The last four weeks almost half the people to come to IDCARE had no idea how the criminals had got their data. But a lot of them (were) telling us they didn’t believe it when their account was blocked.’
‘They just thought it was an admin error.’
While the government is optimistic that its new National Anti-Scam Centre is making a difference, with a '16 per cent reduction in the losses to scams overall' in the fourth quarter of 2023, it's clear that more needs to be done.
‘The results are good…I’m not popping the champaign cork because this is early days,’ Jones said.
‘But it is a sign that the sort of strategy we are putting in place is working.’
However, consumers have expressed their doubts about this move.
‘It is a backwards move—I feel it is penalising customers who have done nothing wrong,’ one commented.
‘Spend some of the billions you make in profits to secure the network. Your customers are not to blame for your poor management,’ another added.
‘Do your jobs and secure your systems,’ one slammed.
Another reacted, ‘Provide opt-in education for inept banking customers.’
‘Treat people like adults and expand, not restrict, the availability of instant transfers—some of us have things to get done,’ a user commented.
Another asked, ‘Is it designed to help customers or give banks another excuse not to pay because of their flawed systems?’
Members of the SDC also shared their insights about the updated security system for confirming their account name and pay ID when making or collecting payments.
‘Too little and too late,’ one said.
‘The big FOUR BANKS are the biggest scammers of all. They make the highest profit of all,’ another commented.
Do you think this move will prevent scams? How do you think this plan will impact your daily transactions? Share them with us in the comments below!
However, this immediacy has also opened the door to a surge of scams that have already left many Australians out of pocket.
In response, banks are now considering slowing down the speed of transactions to help combat this growing issue.
Australia's banking sector is planning to put 'sand in the gears' of its real-time payment system, a move that could see the immediacy of money transfers reduced.
This decision comes as the Albanese government prepares to conclude the consultation process of its Scams Code Framework next week.
Banks may face delayed instant money transactions. Credit: Freepik
This critical piece of legislation aims to create a digital 'ecosystem' involving banks, telecommunication companies, and social media platforms, acknowledging their collective role in the chain of scams.
Financial Services Minister Stephen Jones said: ‘I look at this like a disease.’
'Unless we get various parts of the ecosystem working together, we won't be able to beat it.'
With Australians losing over $3 billion to scammers in 2022, the proposed laws will set minimum standards of conduct for digital players, clarifying each company's role and responsibility in preventing, spotting, and responding to scams.
‘These are sophisticated, multinational operations,’ Jones said.
‘The people involved are more likely to have a psychology degree than a prison sentence. And we’ve got to have a sophisticated operation to go after them.’
The proposed laws will also include a landmark principle: any company found to be in breach of the code will be liable for compensation.
This change aims to prevent banks and customers from bearing the cost of scams and fraudulent activities.
It's a departure from the British model set to take effect later this year, which requires banks to reimburse fraud victims for their losses unless it can be proven that the victim acted 'with gross negligence'.
However, Australian banking executives are concerned about a system focused on compensation instead of prevention.
‘Scams don’t come to customers through their banking apps. Scams come to customers through their SMS messages (and) through their social media, like Facebook,” said Australian Banking Association CEO Anna Bligh.
She described the UK model as a ‘honeypot’ for criminals.
‘It sounds very simple, doesn’t it? If you fall for a scam, the bank will just pick up the tab,’ she said.
‘I think there is a very good reason why no country anywhere on Earth has followed the United Kingdom in this regard, and that’s because it has made them a honeypot for scammers.’
The Australian banking sector has been proactive in reducing risk.
The Australian Banking Association (ABA) announced a $100 million overhaul of online payment systems aimed at improving the safety of transactions and protecting the public from the sly tactics of fraudulent activities.
ABA said that community-owned banks, credit unions, and commercial banks were ‘joining forces’ to address scammers with the Scam-Safe Accord.
Banks are rolling out a new system to match accounts with BSBs, preventing scammers from intercepting transactions between a payer and a payee.
Banks will also have a greater ability to veto payments to suspect 'high-risk' crypto accounts.
Bligh admitted that it was ironic that the industry was now looking to slow down its successful real-time payment system.
'If you're transferring money to someone you have never sent it to before and it's a particularly high amount, a number of banks are now looking at slowing that process down,' she said.
'Maybe holding (it) for 24 or 48 hours.'
Australian bank sectors joined forces to reduce the risk of fraudulent activities. Credit: Freepik
This move has the support of David Lacey from IDCARE.
‘Forewarning consumers to say, “Hey, more friction is on the way, but we don’t lose half a billion a year.” I think that might be worth it,’ he said.
He's keen to see biometric measures applied when opening and shifting money between accounts, including fingerprints and facial recognition software.
‘It’s an arms race. Over time, you can expect criminals will adapt,’ he said.
‘The last four weeks almost half the people to come to IDCARE had no idea how the criminals had got their data. But a lot of them (were) telling us they didn’t believe it when their account was blocked.’
‘They just thought it was an admin error.’
While the government is optimistic that its new National Anti-Scam Centre is making a difference, with a '16 per cent reduction in the losses to scams overall' in the fourth quarter of 2023, it's clear that more needs to be done.
‘The results are good…I’m not popping the champaign cork because this is early days,’ Jones said.
‘But it is a sign that the sort of strategy we are putting in place is working.’
However, consumers have expressed their doubts about this move.
‘It is a backwards move—I feel it is penalising customers who have done nothing wrong,’ one commented.
‘Spend some of the billions you make in profits to secure the network. Your customers are not to blame for your poor management,’ another added.
‘Do your jobs and secure your systems,’ one slammed.
Another reacted, ‘Provide opt-in education for inept banking customers.’
‘Treat people like adults and expand, not restrict, the availability of instant transfers—some of us have things to get done,’ a user commented.
Another asked, ‘Is it designed to help customers or give banks another excuse not to pay because of their flawed systems?’
Members of the SDC also shared their insights about the updated security system for confirming their account name and pay ID when making or collecting payments.
‘Too little and too late,’ one said.
‘The big FOUR BANKS are the biggest scammers of all. They make the highest profit of all,’ another commented.
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