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Economy

Accelerating Real-Time Adoption: The Impact of Embedded Payments on Business Growth

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Instant Payments: Beyond Speed, the Fight for Relevance

Table of Contents

Nearly a decade after The Clearing House launched the RTP® network – the US’s first real-time payments system – the promise of instant money movement remains largely unrealized for many businesses. Tho, experts emphasize that adopting this technology isn’t simply about speed; it’s about strategically aligning use cases wiht capabilities.

“Slow adoption doesn’t mean it’s not worth investing in,” says Janis Wilkey, Vice President of Transaction Banking at Priority. She argues the foundational groundwork for instant payments has now been successfully laid, encompassing new networks, standards, compliance visibility, and evolving consumer habits.

While metrics like throughput and settlement latency frequently enough dominate discussions around real-time payments,Wilkey suggests these can overshadow more crucial indicators of progress. Priority, such as, measures success through KPIs like payment diversification and cost optimization, alongside qualitative measures such as client retention and customer satisfaction.

The core question businesses shoudl be asking isn’t just if payments move faster, but if that speed creates genuine value. wilkey stresses that

How do real-time payments specifically contribute to a better customer experience within embedded payment systems?

Accelerating Real-Time Adoption: The Impact of Embedded Payments on Business Growth

What are Embedded Payments?

Embedded payments refer to the integration of payment processing directly within a non-financial application or platform. instead of redirecting customers to a third-party checkout page, the payment experience happens seamlessly within the user journey. Think ordering food through a restaurant app, booking a ride via a transportation network, or paying an invoice directly from accounting software. This contrasts with customary payment gateways where the customer leaves the primary platform to complete the transaction. Key terms often associated with this include in-app payments, integrated payments, and contextual commerce.

The Rise of Real-Time Payments & Its Connection to Embedded Finance

The growth of embedded payments is inextricably linked to the increasing demand for – and availability of – real-time payments. Systems like FedNow (in the US) and similar initiatives globally are enabling instant money movement. This speed is crucial for the frictionless experience embedded payments promise.

* Faster Settlement: Real-time settlement reduces risk for merchants and improves cash flow.

* Enhanced customer Experience: Instant confirmation and availability of funds contribute to higher customer satisfaction.

* New Business Models: Real-time capabilities unlock opportunities for innovative services like instant payouts and dynamic pricing.

Embedded payments aren’t just about how we pay; they’re a core component of the broader embedded finance revolution, where financial services are integrated into non-financial platforms.

How Embedded Payments Drive Business Growth

The benefits of adopting embedded payments extend far beyond simply offering a convenient payment option. They directly impact key business metrics:

* increased Conversion Rates: Removing friction in the checkout process substantially reduces cart abandonment. Studies show a direct correlation between streamlined checkout and higher conversion.

* Higher Average Order Value (AOV): Seamless payment experiences encourage impulse purchases and larger transactions.

* Improved Customer Loyalty: Convenience fosters loyalty. Customers are more likely to return to platforms that make their lives easier.

* New Revenue Streams: businesses can monetize payment processing by offering value-added services like payment splitting or subscription management.

* Data-Driven Insights: Embedded payment solutions provide valuable data on customer behavior, enabling businesses to personalize offerings and optimize their strategies. This data can inform customer journey mapping and payment analytics.

Industries Leading the Charge in Embedded Payments

Several industries are already experiencing significant growth through embedded payments:

* E-commerce: Beyond traditional online stores, marketplaces and social commerce platforms are leveraging embedded payments.

* Software-as-a-Service (SaaS): Subscription billing,invoicing,and automated payments are essential for SaaS businesses.

* Gig Economy: Platforms connecting freelancers with clients rely on instant payouts to attract and retain talent.

* Healthcare: Streamlining patient payments for co-pays, bills, and insurance premiums.

* Transportation: Ride-sharing,parking,and toll payments are all prime examples of embedded payment applications.

* Restaurants & Food Delivery: Ordering and payment within a single app is now standard.

Technical Considerations & Integration Options

Implementing embedded payments requires careful planning and technical expertise. Businesses have several integration options:

  1. Direct Integration with Payment Networks: This offers the most control but requires significant development resources and PCI compliance expertise.
  2. Payment Facilitators (PayFacs): PayFacs like Stripe and Adyen handle the complexities of payment processing, allowing businesses to focus on their core competencies. This is a popular choice for platforms onboarding multiple sub-merchants.
  3. Embedded payments Platforms: Specialized platforms offer pre-built integrations and APIs designed specifically for embedded payment scenarios.These often focus on specific verticals.

Key technical aspects to consider include:

* API Integration: Robust and well-documented APIs are crucial for seamless integration.

* Security (PCI DSS Compliance): Protecting sensitive payment data is paramount.

* Tokenization: Replacing sensitive card data with tokens to reduce risk.

* Fraud Prevention: Implementing robust fraud detection and prevention measures.

* SDKs (Software Development Kits): Utilizing SDKs can simplify the integration process.

The Future of Embedded Payments: Trends to Watch

The embedded payments landscape is rapidly evolving. Here are some key trends to watch:

* Expansion of Real-Time Payment Networks: Increased adoption of real-time payment systems globally will further accelerate the growth of embedded payments.

* Buy now, Pay Later (BNPL) Integration: Offering BNPL options directly within the checkout flow.

* Decentralized Finance (defi) Integration: Exploring the potential of integrating cryptocurrency payments and DeFi protocols.

* Biometric Authentication: Enhanced security through fingerprint or facial recognition.

* Hyper-Personalization: Tailoring payment options and experiences based on individual customer preferences.

* Increased focus on Cross-Border Payments: Simplifying international transactions through embedded solutions.

Case Study: Shopify & Shop Pay

Shopify’s Shop Pay is a prime exmaple of triumphant embedded payments. By offering a one-click checkout experience across millions of online stores, shopify has significantly increased conversion rates for its merchants. Shop Pay leverages tokenization and stored payment information to create a frictionless experience, contributing to Shopify’s overall growth and market dominance. This demonstrates the power of checkout optimization and **payment experience design

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Economy

Complacency, Not Fraud, is the Real Threat, Warns I2C

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy


AI and the Evolving Fraud Landscape: A Race Against Time for Financial Institutions

Table of Contents

The battle against payment fraud is intensifying, with the methods employed by criminals adapting at a rate that frequently enough outpaces the ability of financial institutions to respond. Artificial intelligence has emerged as a critical, yet complex, tool in this fight, and a new era of regulatory oversight is rapidly reshaping the landscape.

Regulatory Scrutiny on the Rise

A significant progress in 2024 and continuing into 2025 is the increased enforcement of regulations governing the use of Artificial Intelligence in credit decisioning. Global regulatory bodies are prioritizing transparency and fairness in how AI algorithms are applied to evaluating creditworthiness and identifying fraudulent activities. This push for accountability is prompting institutions to meticulously examine their AI governance frameworks.

The European Union’s AI Act, targeting high-risk systems, is a key driver of this change, alongside emerging frameworks in the United States. Financial institutions are now required to ensure their AI models are explainable, ethical, and non-discriminatory.This is not merely a compliance issue, but a fundamental shift in how risk is managed within the digital payments ecosystem.

The Speed of Innovation and the Regulatory Challenge

while regulatory enforcement is anticipated, the sheer velocity of Artificial Intelligence presents a significant challenge. Generative AI and novel risk modeling techniques are capable of rapidly altering procedures related to credit decisions and fraud detection – potentially overnight. Currently, approximately 74% of financial institutions are utilizing AI for financial crime detection, and a similar percentage for fraud detection, underlining the critical importance of real-time monitoring.

Platforms unable to dynamically respond to evolving risks will undoubtedly find themselves at a competitive disadvantage. A recent report by Juniper Research indicates that AI-driven fraud prevention will save financial institutions over $18 billion globally in 2026. (Source: Juniper Research)

From Meeting Requirements to Leveraging Capabilities

Companies like i2c are focused on enabling institutions to not just comply with these new requirements,but to harness the power of AI effectively. Their platform allows for flexible modeling and real-time risk monitoring, enabling issuers to adjust credit rules while maintaining compliance. This approach focuses on building AI models that are both effective and easily understood.

In merchant payments, where fraud is concurrently increasing with digital transaction volume, i2c’s AI monitors transactions in real time across virtual, physical, and B2B card payments. This results in significantly reduced losses for their clients.Their API-based platform also facilitates the seamless integration of new offerings like Buy Now,Pay Later (BNPL),virtual cards,and cross-border payments without requiring major system overhauls.

Real-time Intelligence: the New Imperative

Agility is paramount given the expansion of real-time payments. Financial institutions must have the scalability and real-time intelligence to respond instantly to changing risks. i2c’s payment hub connects to prominent real-time networks, including Visa Direct, ACH, FedNow, mastercard Send, RTP, and Zelle, allowing for immediate approvals or fraud flags.

The company’s AI continuously monitors transactions, dynamically adapting rules and limits based on emerging patterns.In 2024,real-time payment volume surged 38% to 343 million transactions,demonstrating the accelerating pace of change. This rapid growth underscores the necessity for systems that maintain visibility and audit readiness to efficiently navigate evolving AI regulations.

Key Regulation Focus Area Geographic Scope
EU AI Act High-risk AI systems, including credit scoring European Union
U.S. Frameworks Accountability and transparency in AI decision-making United States

The Critical Role of Human Oversight

Despite the increasing sophistication of AI, maintaining human oversight remains essential.Experts caution against a “set it and forget it” approach to AI modeling. Continuous monitoring and validation are crucial to ensure the accuracy and ethical operation of AI systems.

As one industry leader explained, relying solely on AI for critical decisions, such as play-calling in football, could lead to unforeseen consequences. The “human in the loop” is vital for ensuring AI functions effectively and avoids unexpected outcomes.

Understanding the Long-Term Implications

The integration of AI into financial risk management is not a short-term trend but a fundamental shift. Financial institutions that prioritize robust AI governance, real-time monitoring, and human oversight will be best positioned to navigate the evolving landscape of fraud and regulatory compliance. Staying ahead of these changes will be critical for maintaining consumer trust and ensuring the stability of the financial system.

Did You Know?

The global cost of financial fraud is estimated to exceed $350 billion annually, making it a major threat to the financial industry.

Pro Tip:

Regularly audit your AI models for bias and ensure they are aligned with ethical principles.

Frequently Asked Questions About AI and Fraud detection

  • What is the biggest challenge facing financial institutions regarding AI and fraud? The biggest challenge is balancing the benefits of AI with the need for transparency,fairness,and regulatory compliance.
  • How is the EU AI Act impacting financial institutions? The EU AI Act requires financial institutions to thoroughly assess and mitigate risks associated with high-risk AI systems used in areas like credit scoring.
  • What role does real-time monitoring play in fraud detection? Real-time monitoring is critical for identifying and responding to fraudulent activity as it occurs, minimizing potential losses.
  • Is human oversight still vital when using AI for fraud detection? Absolutely. Human oversight is essential to ensure AI models are functioning correctly and ethically.
  • What is the future of AI in financial risk management? The future involves increasingly sophisticated AI models that can adapt to evolving fraud schemes in real-time, alongside stronger regulatory frameworks.

What steps is your association taking to prepare for the evolving AI regulatory landscape? Share your thoughts in the comments below!


What specific data points from I2C’s research indicate internal complacency poses a greater threat than external fraud?

Complacency, Not Fraud, is the Real Threat, Warns I2C

The Rising Tide of Internal Risk

The Identity and Credentialing Council (I2C) recently issued a stark warning: the biggest threat to organizational security isn’t sophisticated external fraud, but rather internal complacency. While headlines frequently enough focus on data breaches caused by hackers, I2C’s research points to a more insidious problem – a gradual erosion of security awareness and diligence within organizations. This isn’t about malicious intent, but a risky slide into assuming “it won’t happen to us.” Understanding the nuances of complacency vs. complacency (as highlighted in linguistic resources – see sources) is crucial, as both terms describe a self-satisfied state that breeds vulnerability.

Why Complacency is More dangerous Than Fraud

Customary fraud prevention focuses on external attacks. Firewalls, intrusion detection systems, and multi-factor authentication are all vital, but they address a reactive threat. Complacency, though, creates a proactive vulnerability. Here’s why:

* Reduced Vigilance: When employees become cozy, they’re less likely to question suspicious activity. Phishing emails go unnoticed, unusual access requests are overlooked, and security protocols are bypassed for convenience.

* Erosion of Security Culture: A culture of security awareness is built on constant reinforcement and a shared understanding of risk. Complacency allows that culture to decay.

* Delayed Response Times: Even when breaches do occur, a complacent team may be slower to detect and respond, increasing the damage.

* Weakened Internal Controls: Routine security checks and audits may be skipped or performed superficially, leaving gaps in defenses. This directly impacts risk management strategies.

The Cost of a Relaxed Approach: Real-World Examples

While specific details of I2C’s findings are proprietary, similar patterns have emerged in numerous publicly reported incidents.Consider these examples:

* The Target Breach (2013): While the initial entry point was a third-party HVAC vendor, Target’s internal monitoring systems failed to detect the malicious activity for weeks, largely due to a lack of focused attention on network traffic.

* Equifax Data Breach (2017): A known vulnerability in Apache Struts wasn’t patched for months, despite warnings. This wasn’t a failure of technology, but a failure of process and prioritization – a symptom of operational risk and complacency.

* Numerous Ransomware Attacks: Many ransomware attacks succeed not because of sophisticated exploits, but because employees click on phishing links or download malicious attachments. This highlights the critical need for ongoing cybersecurity training.

Identifying and Mitigating Complacency: A Practical guide

Combating complacency in the workplace requires a multi-faceted approach. Here are some actionable steps:

  1. Regular Security audits & Penetration Testing: Don’t just rely on automated scans.Conduct thorough audits and penetration tests to identify vulnerabilities and assess the effectiveness of existing controls.
  2. Continuous Security Awareness Training: Move beyond annual training sessions.Implement ongoing, bite-sized training modules that reinforce key security concepts. Focus on phishing simulations and real-world scenarios.
  3. Gamification of Security: Introduce elements of gamification to make security training more engaging and rewarding. Leaderboards, badges, and points can incentivize participation.
  4. Promote a “Question Everything” Culture: Encourage employees to challenge assumptions and report suspicious activity, even if it turns out to be a false alarm.
  5. implement Strong Access Controls: Limit access to sensitive data based on the principle of least privilege. Regularly review and update access permissions.
  6. Automate Security Tasks: Automate routine security tasks, such as vulnerability scanning and patch management, to reduce the risk of human error.
  7. Incident Response Planning & Drills: Regularly test your incident response plan to ensure that your team is prepared to handle a security breach. Tabletop exercises and simulations are invaluable.
  8. Regularly Update Policies: Ensure data security policies are current and reflect the evolving threat landscape.

The Benefits of Proactive Security

Investing in proactive security measures – those designed to combat complacency – yields significant benefits:

* **Reduced Risk of

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Economy

**FedNow Embraces AWS Technology for Immediate Trust Establishment in Instant Payments**

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy



Instant Payments Surge: <a href="https://www.archyde.com/speech-by-vice-chair-brainard-on-fednow/" title="Speech by Vice Chair Brainard on FedNow">FedNow</a> and the Cloud Revolutionize Financial Transactions

The velocity of money is accelerating. Instant payments are no longer a futuristic concept but a present-day reality reshaping how Financial Institutions (FIs) operate and meet escalating customer demands. A key driver of this conversion is the Federal Reserve’s FedNow® Service, launched in 2023, which continues to gain important traction. Banks across the nation are proactively modernizing thier infrastructures to capitalize on perpetually available, cloud-based payment networks.

The Rapid expansion of Instant Payments

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Recent discussions with industry leaders reveal the notable growth trajectory of instant payment systems. According to Dan Anthony, Executive Vice President and Chief information Officer of FedNow, and Nilesh Dusan, Global Head of Institutional Payments at Amazon Web Services (AWS), banks are rapidly embracing opportunities within the instant payments space. This surge is fueled by the cloud’s capacity to foster innovation and bolster robust, personalized systems.

“We’ve increased to more than 1,400 participants on the network, from 35 at launch,” Anthony stated.”Our volume of transactions and our value of transactions are increasing by double- and triple-digit year on year. We’re north of 10x transaction volume increase year on year.” This growth was dramatically highlighted by the system’s critical role in emergency relief efforts, including the processing of the first Federal Emergency Management Agency (FEMA) payments via FedNow.

Cloud Technology: The Foundation for Innovation

The decision to adopt a cloud-first strategy for the FedNow Service was pivotal. “One of the key decisions was launching in the cloud,” anthony explained. “We’re cloud native,and that really affords us the ability to move fast and to innovate.” The cloud’s scalability and resilience proved invaluable, particularly during the challenges of the pandemic, enabling a remarkably rapid onboarding process.

“Our fastest time of onboarding from digital to live is seven days,” Anthony added, a timeline that sets a new standard in the financial service industry.

Banks Embrace Modernization

Nilesh Dusan observed that the FedNow Service is actively prompting Financial Institutions to modernize their payment infrastructure utilizing cloud-native services on AWS. this transition facilitates faster market entry, the creation of highly customized services for both retail and commercial clients, and an overall enhancement of operational efficiency.

This evolution allows banks to move beyond simply migrating existing systems (“lift and shift”) to a genuinely cloud-native design. “That enables our financial customers to go live with these solutions as quickly as possible and increase usage, which accelerates time to value,” Dusan stated.

Key Benefits of Cloud-Native Payment Systems

Feature Traditional Systems Cloud-Native Systems
Scalability Limited and costly to expand Highly scalable and elastic
Deployment Time Weeks or months Days or even hours
resilience Single points of failure Built-in redundancy and disaster recovery
Cost High upfront investment and maintenance Pay-as-you-go model

Expanding Capabilities and Use Cases

Cloud-native microservices are empowering banks to provide dynamic payment routing options. This allows customers to direct payments across various rails, for instance, channeling a missed Automated Clearing House (ACH) payroll payment through the faster FedNow network. Cutting-edge applications are also emerging, like a “just-in-time expense reimbursement” service developed by an AWS client.

“As soon as the expense report is approved,boom,the financial institution is offering that as a service to their corporate customers,” Dusan explained. Anthony lauded this as precisely the kind of innovation FedNow was designed to unlock.

Increased Transaction Limits and enhanced Security

Responding to demands from banks, FedNow has progressively increased transaction limits. The service initially launched with a $500,000 ceiling,which was raised to $1 million earlier this year; Almost immediately,maximum value transactions were flowing through,and there is now significant demand for $10 million transaction capabilities. Alongside these expanded limits, the Federal Reserve has implemented enhanced risk management services, automation tools, and account activity thresholds.

Requests for payment (RFPs) in the Business-to-Business (B2B) sector are also gaining prominence, offering the potential to streamline invoicing and payment processes through complete automation with real-time payments.

The need for Holistic Process modernization

Though, Dusan cautioned that instant payment rails are only one piece of the puzzle. “FedNow can do instant payments, but if the processes before that are batch, then you are not giving their end customers the full benefit.” Banks require 24/7 ledger accessibility, near-instantaneous risk and fraud protocols, and integrated Know Your Customer (KYC) verification to realize the full potential of instantaneous fund transfers.

Developing novel embedded experiences necessitates experimentation and a shift in mindset. “Technology is the easy part… but how do you use FedNow in the context of a business value that you can deliver to the end customer? That is an experiment.”

Building Trust and Embracing Data

The cloud-first approach prioritizes resilience, security, and safety, fostering customer confidence. “Personalization is extremely useful and important,and the technologies plus the things that are happening across the industry from a data standpoint are helping all of us build those personalized experiences for their end consumers at scale.”

Looking forward, both executives emphasized the importance of leveraging richer data sources, particularly the ISO 20022 standard, which contains thousands of data fields. This data will be integrated into supply chains and utilized by financial institutions to create innovative value-added services.

Anthony summarized the vision: “Financial institutions come on to FedNow to bring the value of instant payments to their customers. That value is really maximized when they can not only receive, but also send instant payments. That’s when they can manage their own bank accounts and their own finances with full adaptability, and to paraphrase, move money at the speed of need.”

looking Ahead: The Future of Instant Payments

The evolution of instant payments is expected to continue at a rapid pace, driven by advancements in cloud technology, data analytics, and evolving customer expectations. The integration of artificial intelligence (AI) and machine learning (ML) will further enhance fraud detection, risk management, and personalization efforts.As adoption grows, we can anticipate increased interoperability between different payment systems, both domestically and internationally.

Did You Know?: A recent survey by Juniper Research predicts that instant payments will account for over 60% of all digital payments by 2028.

Pro Tip: Financial institutions should prioritize investment in cloud infrastructure and talent to remain competitive in the rapidly evolving payments landscape.

What challenges do you foresee with wider adoption of instant payment systems?

How will instant payments impact small businesses and consumers?

Frequently Asked questions About Instant Payments

  • What are instant payments? Instant payments are electronic funds transfers that are settled in real-time, 24/7, 365 days a year.
  • How does FedNow work? FedNow is a real-time gross settlement (RTGS) service that enables financial institutions to instantly transfer funds between accounts.
  • What are the benefits of instant payments for businesses? Instant payments offer benefits such as faster access to funds, improved cash flow, and reduced risk of fraud.
  • Is FedNow secure? FedNow employs advanced security measures to protect against fraud and cyber threats.
  • What role does the cloud play in instant payments? The cloud provides the scalability, resilience, and agility needed to support the demands of instant payments.
  • What is ISO 20022 and why is it important? ISO 20022 is a global standard for electronic data interchange between financial institutions, providing richer and more structured payment data.
  • What are the future trends in instant payments? Future trends include increased interoperability, integration with AI/ML, and expanded use cases in B2B payments.

Share your thoughts in the comments below – what impact do you think instant payments will have on the future of finance?


How does AWS Identity and Access Management (IAM) contribute to maintaining data integrity within the FedNow service?

FedNow Embraces AWS Technology for Immediate Trust Establishment in Instant Payments

the Shift to Real-Time Payments & The Need for Trust

The financial landscape is rapidly evolving, driven by consumer demand for instant gratification. This has fueled the rise of real-time payments, and in the US, FedNow is leading the charge.But faster payments aren’t useful without trust. Establishing and maintaining trust in every transaction is paramount, and that’s where Amazon Web Services (AWS) comes in. FedNow’s strategic partnership with AWS isn’t just about infrastructure; it’s about building a secure, scalable, and resilient foundation for the future of money movement. This article dives into how AWS technologies are enabling immediate trust establishment within the FedNow service, impacting instant payment systems, payment rails, and the broader financial technology (FinTech) ecosystem.

AWS Services Powering FedNow’s Security Architecture

FedNow isn’t built on legacy systems. It’s a modern platform leveraging cloud-native technologies. Here’s a breakdown of key AWS services and their roles in bolstering trust:

* AWS Identity and Access Management (IAM): IAM provides granular control over who can access FedNow resources and what actions they can perform. this is critical for preventing unauthorized access and maintaining data integrity. It’s a core component of payment security.

* AWS Key Management Service (KMS): KMS handles the encryption of sensitive data, both in transit and at rest. This ensures that payment facts remains confidential and protected from breaches.Data encryption is a essential aspect of trust.

* Amazon GuardDuty: This bright threat detection service continuously monitors FedNow’s AWS surroundings for malicious activity and unauthorized behavior. Proactive threat detection is vital for maintaining a secure payment infrastructure.

* AWS cloudtrail: CloudTrail logs all API calls made to FedNow’s AWS resources, providing a complete audit trail for security investigations and compliance purposes.Audit trails are essential for accountability and transparency.

* Amazon Virtual Private Cloud (VPC): VPC allows FedNow to create a logically isolated section of the AWS Cloud where they can launch their resources in a virtual network that they define. This enhances security and control.

* AWS Shield: Provides protection against Distributed Denial of Service (DDoS) attacks, ensuring the availability and reliability of the FedNow service. DDoS protection is crucial for maintaining continuous operation.

How AWS Enables Immediate Trust – Beyond Encryption

While encryption is a cornerstone of security, AWS facilitates trust in more nuanced ways:

  1. Zero Trust Architecture: FedNow, leveraging AWS, is adopting a Zero Trust security model. This means no user or device is automatically trusted, nonetheless of whether they are inside or outside the network perimeter. Every access request is verified before being granted.
  2. Multi-Factor Authentication (MFA): AWS IAM integrates seamlessly with MFA providers, adding an extra layer of security to user accounts.
  3. Real-time Monitoring & Alerting: AWS CloudWatch provides real-time monitoring of FedNow’s performance and security metrics.Automated alerts notify security teams of any suspicious activity, enabling rapid response.
  4. Automated Compliance: AWS provides tools and services that help FedNow meet stringent regulatory requirements, such as PCI DSS compliance and othre financial regulations.
  5. Immutable Infrastructure: Utilizing infrastructure-as-code with services like AWS CloudFormation allows for consistent and repeatable deployments, reducing the risk of configuration errors and vulnerabilities.

The Impact on Financial Institutions & Consumers

The benefits of FedNow’s AWS-powered security extend beyond the core infrastructure:

* Reduced Fraud Risk: Enhanced security measures minimize the risk of fraudulent transactions, protecting both financial institutions and consumers.

* Faster Dispute Resolution: Detailed audit trails and real-time monitoring capabilities streamline the dispute resolution process.

* Increased Confidence in Instant Payments: A secure and reliable platform fosters greater consumer confidence in using instant payment services.

* Innovation in fintech: A robust and secure foundation encourages innovation in the FinTech space, leading to new and improved payment solutions.

* Scalability for Future Growth: AWS’s scalability allows FedNow to easily accommodate increasing transaction volumes as adoption grows. This is vital for the long-term success of instant payment technology.

Real-World Examples & Early Adopters

While specific details of individual financial institution implementations are confidential, several banks and credit unions have publicly announced their participation in the FedNow pilot program. These early adopters are actively leveraging the security features provided by AWS to ensure the safe and reliable operation of their instant payment services. For example, early testing focused on validating the end-to-end security of transactions, including authentication, authorization, and data encryption. The feedback from these pilots has been instrumental in refining the FedNow platform and strengthening its security posture.

practical Tips for Financial institutions Integrating with FedNow

for financial institutions looking to integrate with FedNow, here are some key considerations:

* Prioritize Security: Implement robust security controls at every layer of your infrastructure, leveraging AWS security services.

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Economy

Disrupted AP Workflows: Heightened Risk to Supply Chains During a Pivotal Time

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy


AP Modernization: How AI is Transforming <a href="https://www.archyde.com/cineworld-claims-judge-erred-in-cineplex-case/" title="Cineworld cl...ms judge 'erred' in Cineplex case">Accounts Payable</a> into a Growth Engine

For decades, Accounts Payable (AP) has been largely viewed as a necessary, but unglamorous, administrative task. Traditionally, it was rarely a topic of discussion in executive boardrooms. However, a notable shift is underway, redefining the role of AP through the integration of managed services and artificial intelligence (AI) automation.

This evolution is recasting invoice processing not simply as a cost centre, but as a crucial lever for safeguarding cash flow, nurturing supplier relationships, and even generating new revenue streams. The financial landscape is changing, and AP is at the forefront of adapting to this new reality.

The Strategic Value of Modern Accounts Payable

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According to industry experts, a modernized AP function is now essential for mitigating financial risks. “Accounts Payable is one of the most effective tools organizations have to protect their cash and minimize exposure,” states a leading financial technology executive. This sentiment reflects a broader recognition that strategic payment management is integral to overall business resilience and sustainable growth.

The benefits extend beyond risk mitigation. Faster and more reliable payments foster stronger ties with suppliers, which is critical in a world frequently impacted by supply chain disruptions and fluctuating market conditions.Furthermore, enhanced fraud detection capabilities, powered by AI, safeguard against increasingly refined financial crimes.

Did You Know? A recent study by the Association for Financial Professionals (AFP) found that 78% of organizations have experienced some form of payment fraud attempt in the past year.

Addressing the challenges of AP Transformation

Despite the clear advantages, the adoption of AP automation remains uneven. Larger multinational corporations with complex global operations have been quicker to embrace change, driven by economies of scale and heightened operational risks. Mid-sized companies often face hurdles related to cultural resistance and the technical complexities of implementation.

“Implementing change is never easy. Companies grapple with supplier integration and concerns about the potential risks associated with new systems,” explains a financial operations consultant. “These factors often contribute to delays in the modernization process.”

Despite the potential benefits, a significant portion of companies still rely on manual invoice processing. current data indicates that approximately 68% of organizations continue to handle invoices manually, despite the fact that managed AP services can reduce processing time by up to 84%.

Pro Tip: Prioritize open communication with both internal teams and suppliers to ensure a smooth transition to a modernized AP system.

From Cost center to Growth Driver: A Phased Approach

Transforming AP requires a strategic, phased approach.Leading experts emphasize that modernization isn’t solely about implementing new software. A fully managed service layer is often necessary, particularly for organizations with intricate supplier networks.

The initial focus should be on eliminating manual labor. Automating repetitive tasks frees up valuable capacity and lays the groundwork for further optimization. “The first step is to tackle the biggest bottleneck: the labor involved in manual processes,” suggests a financial technology specialist. “Reducing manual entry, streamlining workflows, and minimizing unnecessary phone calls delivers immediate benefits.”

Once the labor burden is reduced, organizations can focus on accelerating payment cycles and increasing digital adoption through AI-powered supplier engagement. Shifting from paper checks to digital and card-based payments offers significant cost savings and revenue opportunities.

Payment Method Average Cost Per Transaction Potential Cash Back/Rebates
Paper Check $8.00 $0
Digital/Card Payment $0 – $2.00 Up to $8.00

However, the greatest gains are realized when automation is combined with AI-driven analytics. AI’s predictive capabilities not only optimize payment flows but also enhance fraud detection – a growing concern as criminals exploit vulnerabilities in traditional processes. AI-powered systems can achieve up to 90% accuracy in predicting supplier adoption of digital payment methods.

Ultimately, embracing AI and automation transforms AP from a reactive bottleneck into a scalable platform that supports business growth. As organizations mature in their AP modernization journey, human intervention is reserved for exceptional cases, leading to increased efficiency and cost savings.

Looking Ahead: The Future of Accounts Payable

The trend towards AP automation and AI integration is expected to continue accelerating in the coming years. As technology evolves, we can anticipate even more sophisticated solutions that further streamline processes, enhance security, and unlock new opportunities for value creation.Focusing on data analytics will be paramount, allowing organizations to gain deeper insights into their spending patterns and supplier relationships.

Frequently Asked Questions about Accounts Payable Modernization

What is Accounts Payable (AP) modernization?

AP modernization involves leveraging technology, such as AI and automation, to streamline invoice processing, improve efficiency, and reduce costs within the Accounts Payable function.

How does AI benefit Accounts Payable?

Artificial Intelligence enhances AP by automating tasks like invoice data capture, fraud detection, and supplier payment prediction, leading to increased accuracy and reduced manual effort.

What are the biggest challenges to AP automation?

Common challenges include cultural resistance to change, integration with existing systems, and ensuring supplier adoption of digital payment methods.

what is a managed AP service?

A managed AP service outsources the entire Accounts Payable process to a third-party provider, offering expertise and technology to optimize efficiency and reduce costs.

How can businesses improve supplier relationships through AP?

Faster, more predictable payments and transparent communication strengthen supplier relationships, fostering trust and ensuring a reliable supply chain.

Is AP modernization worth the investment?

Yes. AP modernization reduces costs, minimizes risks, and unlocks valuable data insights, contributing to improved financial performance.

What steps is your association taking to modernize it’s Accounts Payable processes? Share your thoughts and experiences in the comments below!

How can organizations leverage AP automation to enhance supply chain resilience against unforeseen disruptions?

Disrupted AP Workflows: Heightened Risk to Supply Chains During a Pivotal Time

The Critical Interplay of Accounts Payable and Supply Chain Resilience

Accounts Payable (AP) workflows are no longer just a back-office function; they are a critical component of supply chain health and stability. In today’s dynamic business surroundings, disruptions to AP processes can have far-reaching consequences, impacting everything from vendor relationships to the timely availability of essential goods and services. This article delves into the specific risks, the underlying causes, and the crucial steps businesses can take to mitigate these challenges. Key terms we’ll explore include AP automation, supply chain finance, procure-to-pay (P2P), payment processing, and working capital.

Understanding the Vulnerabilities: How AP disruptions Undermine Supply Chains

Several factors can disrupt AP workflows, leading to cascading problems within the supply chain. These include:

* Manual Processes: Legacy AP systems reliant on paper invoices, manual data entry, and physical check processing are inherently inefficient and prone to errors. This slows down payment cycles, increasing the risk of late payments, straining vendor relationships, and even impacting businesses ability to procure critical supplies.

* Cybersecurity Threats: AP departments are prime targets for cyberattacks. Successful attacks can lead to fraudulent payments, data breaches, and meaningful financial losses, further weakening already strained supply chains.

* Lack of Visibility: without real-time visibility into invoices, payment statuses, and vendor information, businesses struggle to make informed decisions and proactively manage potential disruptions. Poor AP data analytics also limits the ability to identify and resolve bottlenecks.

* Human Error: Manual processes, as highlighted above, are inherently prone to human error. Mistakes in data entry, invoice coding, or payment processing can cause delays, overpayments, and payment misdirection – all of which directly impact supply chains.

* Economic Downturns and Market Volatility: Fluctuations in the global economy, including increasing inflation rates, can substantially affect cash flow management and the ability to fulfill financial obligations. This can lead to delayed payments or even payment defaults, putting further pressure on supply chains.

The Ripple Effect: Consequences of AP Workflow Disruptions

When AP workflows are disrupted, the negative impacts extend far beyond the finance department.

* Strained Vendor Relationships: Late payments erode trust with critical suppliers, potentially leading to stricter payment terms, reduced discounts, and disrupted supply of goods or services.

* Supply Chain Delays: Invoices are not processed in a timely manner the entire supply chain is at risk. Reduced vendor performance and shortages in much-needed supplies can cause delays in overall fulfillment to your customers.

* Increased Costs: Late payment fees,penalties,and the cost of expediting payments eat into profit margins and increase financial risk.

* Damage to Reputation: A company’s reputation with vendors and customers can be damaged if it struggles to meet its financial obligations.

* Operational Inefficiencies: Manual processes require heavy headcount, resulting in slower processes and increased costs.

Strengthening Your Defenses: Strategies to Mitigate Risk

Proactive measures are essential to fortify AP workflows and protect against disruptions.

* Embrace AP Automation: Implementing AP automation software is one of the most effective ways to streamline processes,reduce errors,and improve payment cycle times. Features include:

* Invoice scanning and data capture: Automating invoice processing, including OCR technology.

* Automated approvals: Automating the approval processes of payments, giving greater control

* Electronic payments: Automating the payment of invoices, reducing errors and delays.

* Strengthen Cybersecurity: Implement robust security protocols, including multi-factor authentication, regular security audits, and employee training, to protect against fraud and data breaches.

* Improve Data Visibility: Invest in AP analytics tools to gain real-time insights into key performance indicators (KPIs) such as invoice processing times, payment cycle times, and vendor performance.

* Optimize Supplier Relationships: Work with vendors to establish pre-approved payment terms, negotiated discounts, and strong communications protocols.

* Develop Contingency Plans: Create a business continuity plan that outlines steps to take in the event of an AP disruption, including option payment methods and communication strategies.

* Adoption of Blockchain Technology: Explore how blockchain technology offers secure and automated payment tracking.

Case Study: Success Story of AP Automation

[[note: A real-world example or case study would be included here. Because I cannot create a fake story, I will give you a hypothetical scenario]

A mid-sized manufacturing company, faced with growing supply chain challenges, implemented AP automation. The company significantly reduced invoice processing times, decreased late payments

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