January 24, 2019

ACH Payments Have Lowest Fraud Rate, Fed Survey Finds


Michael W. Kahn

Payments fraud “remains rare” in the U.S., with ACH payments having the lowest fraud rate by value, a new Federal Reserve study found.

“Changes in U.S. Payments Fraud from 2012 to 2016: Evidence from the Federal Reserve Payments Study,” released late in 2018, surveyed depository institutions, collecting data for 2012 and 2015. 

It found that payments fraud “represents only a fraction of 1 percent of the total value or number of payments.” And where ACH is concerned, the Fed reported that “the fraud rate, by value, for ACH payments was low and stable.” 

“ACH payments had the lowest fraud rate, by value, among the payment types, remaining flat at 0.08 basis points in 2012 and 2015,” according to the study. Eight basis points equates to 8 cents for every $10,000 in payments.

“The ACH industry works hard to minimize the incidence of fraud on the ACH Network,” said Michael Herd, Nacha senior vice president, ACH Network administration. “Through Rules, education, guidance and tools, Nacha is committed to the continuous improvement of ACH risk management.”

The Fed also reported that card fraud went from accounting for less than two-thirds of the value of fraud in 2012 to more than three-quarters in 2015. “The fraud rate, by value, of card payments and ATM withdrawals combined increased from 7.99 basis points to 10.80 basis points,” the survey found. 

Payment card networks were also surveyed, with the Fed gathering 2015 and 2016 data. Year-to-year, the fraud rate, by value, for credit cards increased slightly while slipping for debit cards.

The Fed researchers also noted that “payments providers have increasingly introduced technological innovations to mitigate fraud or to add convenience, security, and other potential improvements to the payment experience.”

And they concluded that “the findings show that, while vulnerabilities exist—and specific experiences are likely to vary substantially from the overall picture—the U.S. payments system, in the aggregate, is resilient and responsive with respect to payments fraud vulnerabilities.”

The complete “Changes in U.S. Payments Fraud from 2012 to 2016: Evidence from the Federal Reserve Payments Study” is available here.