By BECKY GILLETTEGone are the days when businesses had to mail checks to pay bills and wait until the end of the month to get bank statements. Now both large and small businesses find it extremely convenient to bank online.
“The old fashioned way was to write a check, mail it and then it would take time to clear,” said Chevis Swetman, president and CEO, The Peoples Bank, Biloxi. “People aren’t doing that anymore. They want it, and they want it now.”
Swetman said there are three main ways to have money transferred. After writing a check, the next most used function is using the Automated Clearing House (ACH) generally for low dollar, high volume type transactions such as routine bill pays.
There are few large transactions going out through the ACH. For those, people use wire transfers.
“Most of the banks participate in the Federal Reserve Wire System (Fedwire),” Swetman said. “That allows you to transfer money in the fastest possible time. That is generally used for large dollar amount transactions. Because the wire transfer has the greatest fraud potential, that is where banks have the most security checks.”
All banks have rules to prevent fraud, such as those regarding average collected funds in account. An example: if your account has an average collected balance of $800 and you come in to deposit a $30,000 check, you aren’t going to be allowed to withdraw out a large part of that until the check clears.
Swetman said wire transfers can’t be done by e-mail because the probability is too high that the email account has been hacked. Faxed authorizations also aren’t accepted. Despite all the precautions, all too often cyber criminals are a step ahead of the game.
“One of the biggest concerns in banking is people are doing a lot of person-to-person transfers through ACH,” Swetman said. “There is not that much protocol involved there yet to prevent somebody from being scammed or losing their money. I think that is going to be the wave of the future. It is just going to take time to improve security.”
Swetman said there are some small precautions people take,like not keeping a large sum in their checking account, and using a credit card to buy online instead of a debit card.
A lot of banks are moving from the old magnetic stripe to the EMV chip as an enhanced security feature on debit and credit cards. Some small retailers have complained about the cost to buy new credit card machines that use the EMV chip.
“What if they bought a new credit card machine two years ago, but it is not chip enabled?” Swetman asked. “But there is a liability shift if retailers don’t have the necessary processing equipment to process the EMV chip. The flip side of it is the losses on debit cards are growing exponentially. Consider the Target breach or the TMJ Max breach. It would be great if you could stay step or two ahead of cybercrime but, in my opinion, the bad guys are generally a step or two ahead of us.”
“ACH fraud can be costly for a business,” said Hancock Bank Manager of Treasury Products Kerrie Duvernay. “As ACH payments continue to increase, businesses need the right tools to prevent fraud while still processing ACH debits quickly and easily.”
Hancock Bank recently introduced ACH Positive Pay to help businesses catch fraudulent ACH debits through daily review and disposition of all incoming ACH debits.
ACH Positive Pay sends custom email or text alerts each business morning for ACH debits on a business account. A businesses can then sign on to ACH Positive Pay through a web-based portal for a streamlined view identifying the originator, dollar amount, company description, and other pertinent information. The business can then decide which debits to pay or return.
Businesses can place trusted vendors on an authorized self-service list to accept transactions without approval or review.
“ACH Positive Pay gives businesses timely, online access to incoming ACH debits and the peace of mind that they can identify and return fraudulent ACH debits each day,” Duvernay said.
Randy Burchfield, senior vice president, corporate communications, BancorpSouth, Tupelo, said online banking users can get tricked into giving out sensitive user or account information through a variety of means including phishing attacks, malware, site spoofing, etc., thereby providing cybercriminals with the tools to commit fraud.