UNCERTAINTY IN INBOUND FUNDING IN 2024 AND HOW TO NAVIGATE IT
by Drew Edwards
Challenges in Inbound Funding Money
Funding an account through various channels — such as ACH, checks and card-based transactions — carries an inherent risk of fraud and potential losses for financial institutions. While it may look like funds have been received and are “good,” many players are learning the hard lesson that even honest consumers often have 90 days or more to claw back funds that may have already been moved or spent.
The presence of truly bad actors seeking to fraudulently fund accounts exacerbates these risks, creating an environment of uncertainty that threatens the growth, stability and even viability of these emerging financial entities. The transactional costs associated with inbound funding can be dwarfed by the true cost inclusive of bad debt.
The Need for Real Solutions
In all this uncertainty, luckily, there are solutions that can be leveraged effectively which include risk management and, in some cases, good funds guarantees. Robust payment partners equipped with extensive historical data on fraudulent activities, nationwide footprints and advanced technologies like machine learning and artificial intelligence (AI) offer an inroad to stability for these financial institutions. By identifying patterns, detecting anomalies, and preemptively identifying fraudulent behavior, these partners play a crucial role in minimizing the risks associated with inbound funding.
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