Nacha, the US-based electronic payments association, is undertaking two new projects designed to help financial institutions and merchants control risk and fraud associated with Internet-initiated payments.
David Merritt, chairman of the Nacha Internet Council and vice president and product design manager in the new business development group of Mellon Global Cash Management, says: "Through these projects, the Internet Council will assist organisations in identifying the types of risk and fraud that pose threats to their businesses, and in adopting methods to mitigate them."
A 'Fraud 101' project will identify and catalogue the various types of Internet payments fraud such as transaction-level fraud, identify theft, invalid accounts, and non-sufficient funds. The project will produce a white paper that provides guidance for preventing, detecting, and addressing fraudulent activity.
A risk management project will focus on the risks of specific Internet-initiated payment types such as automated clearing house (ACH), credit card, online debit card, offline debit card, and person-to-person payments. Categories of risk include credit, operational, fraud, systemic and reputation risk. The project participants will author an industry publication that provides guidance on managing the risks of Internet-initiated payments.
Both the fraud and risk management projects will begin in January 2002 and are scheduled to be completed by mid-2002.
In addition to these two projects, a third new project will examine the application of Unified Modeling Language techniques and tools to ACH processes. The UML project is scheduled to begin during the first quarter of 2002.