Consumers go online to complete their purchases during the pandemic – even for large purchases typically made in person, such as to buy a car. However, buyers who have become accustomed to fast digital transactions may find it all the more painful when their auto finance payouts take days to arrive. Those who were happy to wait days for checks in the mail or for ACH transactions to settle are now likely to view these delays as unnecessary friction on their car-buying journeys.

So many consumers want auto financing to be as quick as possible, and companies like the auto finance provider Westlake Financial see the disbursements made on the RTP® network as the future of the industry. Westlake has already sent millions of dollars over the RTP network during the pandemic, according to Westlake’s chief accounting officer Raul Alvarez.

However, accelerating auto finance disbursements to real-time speeds requires careful planning and preparation. As with any payment method, fraudulent attacks and human error can disrupt the customer experience unless companies have strong security strategies in place. Alvarez explained in a recent interview with PYMNTS how effectively securing real-time transactions requires extensive contingency planning and advanced customer verification methods.

Contingency planning

the RTP network is a powerful tool, but any tool must be used correctly to have the desired effect. Westlake spent a month and a half testing use cases and troubleshooting fraud scenarios before realizing that immediate payments could result in reduced administrative costs, fast speeds, and 24/7 uptime. , but such transactions are also almost irreversible, which adds complexity. Payments sent to the wrong account by mistake or as a result of a scam by a fraudster simply cannot be reversed until the funds are cleared.

“We know real-time payments are a type of payment that’s more of a wire transfer – it’s very difficult to get the funds back,” Alvarez said. “We can’t take them out like you would with ACH or whatever. You cannot object [like] on a check. The risk level is higher.

It was therefore essential for Westlake to ensure that all of its security measures were in place to block fraudsters. He also had to prepare contingency plans on how to react if bad actors escaped or if technical difficulties or human errors interrupted the proper use of the faster payment network.

“There have been a lot of risk assessments: ‘What if this happens? “What if that happens?” And we had to make sure we had contingencies ahead of us before that really happened, ”Alvarez said.

The in-depth risk assessment required considering possible problematic scenarios, such as funds being transferred to the wrong customer account. Alvarez gave a hypothetical example in which auto finance loans were sent to a married couple but were paid into the wrong spouse’s account. The company, by arrangement with its bank, Wells fargo, can now examine potentially misplaced RTP transactions, recover funds from incorrect recipient accounts and return them to Westlake, Alvarez said.

“If the funds go out via RTP [with] Incorrect [account] information, Wells Fargo comes back and reviews the information we provided, ”Alvarez said. “If by any chance it went to the wife’s bank account instead of the husband’s, who was the primary member of the account, it actually comes back to us and we can send the funds again. “

Other contingency plans considered what to do if Westlake lost access to the RTP network. The company accesses the payment system in real time through integration with its bank’s application programming interface (API), and it has had to think about what to do in the unlikely event that it loses that connection. during the transaction, for example. This led Westlake to prepare internal systems so that an interrupted transaction would be switched to the alternative payment methods preferred by customers, like ACH or MoneyGram.

Early intervention

Avoiding problems before they arise is ideal, of course, and Westlake and Wells Fargo have various safeguards in place to help anticipate potential problems. Westlake now uses an RTP pre-confirmation system through their bank that compares the account details that the financial institution (FI) has on file for a given customer with those that Westlake staff enter at the point of sale (POS) before authorizing the cleanse transaction. This is intended to detect incorrectly entered account numbers at the point of sale and prevent those payments from going through.

“If I buy something on Amazon and I incorrectly entered my credit card number by one number, it does not allow me to make the transaction. We had to get this for RTP, ”Alvarez said.

Good security also requires preventing RTP transactions from being delivered to scammers, as scammers who receive immediate funds can quickly disappear with them. Robust onboarding methods are therefore essential: Westlake requires users to confirm their identity using various official documents and details, such as social security numbers or passports. He even used personal references in some cases.

The company also reviews historical data on applicants, such as their history of bank account balances and overdue bill payments. Details like these are not used to assess creditworthiness, but rather to better understand whether patterns of behavior suggest legitimate customers or fraudsters. Artificial intelligence (AI) tools also help assess the many customer data points collected to determine the likelihood of fraud, Alvarez said. If something should go wrong again, Westlake and Wells Fargo will work to fix the problem quickly, and the problem will become another data point that AI can use to make its fraud assessments more robust, he said. declared.

Adopting new payment technologies is a powerful way to usher in more compelling customer experiences, but companies also need to innovate in their troubleshooting and anti-fraud strategies to keep everything safe. Advanced intelligence tools, robust contingency planning, and strong integration controls can be critical steps that pave the way for fast and secure payments.