In today’s highly competitive financial landscape, acquiring new customers is no longer the only hurdle for account issuers. The real challenge lies in making newly opened accounts useful and accessible from the moment of acquisition.
While customer onboarding is often instantaneous, funding remains a bottleneck, with slow and risky methods like checks and ACH causing days-long delays in funds availability. As a result, a large percentage of accounts are opened but never funded, significantly driving up acquisition costs without delivering value. This disconnect between account creation and funding leaves issuers struggling to activate and engage new customers, ultimately missing opportunities to maximize the potential of newly acquired accounts.
However, a broader transformation of account funding is underway. Innovations like digital transfers from bank accounts, debit card transactions, and check deposits are shifting the process from slow and risky to instant and risk-managed, making account funding faster, safer, and more reliable for both issuers and their customers.
Instant Access: Innovations in Digital Account Funding
The modern fintech era has introduced instant account funding, enabling customers to move money into their accounts in real time, using digital payment rails to provide immediate access to deposited funds. Customers can now instantly fund their accounts via digital transfers from bank accounts, cards, or check transactions, making account creation not only fast but immediately useful.
Among the newer innovations is instant card funding using Account Funding Transactions (AFT). These transactions, initiated by the cardholder’s bank via Visa Direct or Mastercard Send, allow customers to pull funds directly from a debit or credit card into a new or existing account. Although AFT is still relatively new, its growing adoption is transforming how funds move between accounts, offering faster, more efficient transfers for both issuers and customers.
The Challenges: Fraud Risks in Digital Account Funding
While digital account funding brings significant benefits, it also comes with risks—most notably fraud. Instant transactions provide less time for issuers to review and mitigate risks, while ACH transfers impose risks due to lengthy return cycles. Types of fraud associated with digital account funding include:
- Friendly Fraud: This occurs when a consumer initiates a legitimate transaction to fund their account—such as using a debit or credit card to transfer money into their fintech or bank account—but later disputes the transaction with their card issuer, claiming it was unauthorized or a mistake.
- Account Takeover Fraud: Hackers gain access to a consumer’s account and initiate unauthorized transactions.
- Card-not-present (CNP) Fraud: In digital card transactions where the physical card isn’t presented, fraudsters use stolen card details to fund accounts instantly.
In the U.S., consumers may have up to 90 days to dispute an unauthorized electronic funds transfer. This consumer protection, while crucial, adds significant risk for issuers. Even after funds have been made available instantly, consumers can file a dispute, forcing issuers to investigate the claim and potentially refund the money. This can lead to losses for account issuers, especially in cases of friendly fraud where the transaction was initially authorized by the consumer.
The Impact of Fraud on Account Issuers
Due to the heightened risk of fraud, many issuers have scaled back or discontinued their offerings of instant funding. The potential for significant losses, coupled with regulatory obligations to address disputes, has made it a risky endeavor. As a result, despite strong consumer demand for fast and accessible funds, some issuers have been cautious in adopting or expanding their instant funding solutions.
Ingo & Sardine’s Risk-Managed Solutions for Instant Card & ACH Funding
To address the challenges posed by account funding fraud, Ingo has partnered with Sardine to offer instant account funding via card and ACH, jointly providing the technology, processing, and protection necessary to drive account usage. This unique offering leverages our collective expertise and databases to manage risk across our network of clients and customers.
Our solution combines the power of Ingo’s and Sardine’s extensive network-wide fraud data and AI-driven analysis to generate real-time risk scores. These scores empower issuers to make fast, informed decisions on funding eligibility, while minimizing exposure to fraudulent transactions. Together, our advanced risk models continuously evaluate transactions for fraud indicators, providing issuers with immediate insights into the risk profile of each transaction.
Additionally, Ingo’s dedicated support team monitors all transactions in real time, adding another layer of protection against instant fraud. This live risk management allows us to catch fraudulent activities as they happen, further safeguarding businesses from potential threats.
By identifying fraud risks, protecting against them, and locking out bad actors, Ingo and Sardine ensure a safer, more efficient account funding process that benefits both issuers and customers.
Zero-Liability Fraud Guarantee
Beyond fraud detection and risk scoring, our offering includes an optional zero-liability fraud guarantee. Account issuers who choose this guarantee option are fully protected from any financial losses caused by fraudulent chargebacks or disputes. This means that if a fraudulent transaction bypasses our detection systems, we take full responsibility for the chargeback, relieving issuers of any liability. This level of protection is rare in the market and offers peace of mind for issuers looking to offer account funding without the risk.
With Ingo Payments and Sardine, account issuers can offer faster, safer, and more secure account funding options. For Fintechs, our solutions mitigate risk while enabling exceptional customer experiences. For traditional banks, they provide seamless onboarding and instant funding, keeping them relevant in the digital landscape. These innovations enhance services and protect issuers’ bottom line in a competitive market.
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Looking for account funding solutions with comprehensive risk management and guaranteed fraud protection across all funding sources—card transfers, bank transfers, and checks? Ingo Payments can help.
