How TD Bank Masters Payment Processing Risk
“You learn a lot by following the money,” a great quote that Sara Pinkus, VP of Payments Risk Management at TD Bank, told me before her PAYMENTS 2016 presentation with TD Auto Finance and ACI Worldwide entitled Hide and Seek: Uncovering Your Internal Originators and the Risks They Pose.
Sara shared these seven imperatives to managing payment processing risk for internal departments. Her experience comes from monitoring payments risk from end to end across the bank. One aspect of the monitoring includes how internal departments use payment processing systems.
- Track the payment processing risk of external and internal groups.
When managing risk, many people first look at external customers. But do not forget about the internal departments that access payment processing systems.
- Establish a payment processing risk policy to assess strategies and processes, and test key controls.
The bank established a process to better recognize, account for and approve funds transfers by defining the controls, key performance indicators and monitoring aspects that bring a policy to life. This increased transparency of internal departments moving money in and out of the bank.
- Establish clear roles and responsibilities for administering the policy cross-functionally.
Many systems and areas within the organization get involved throughout the process. TD Bank found that you must increase consensus on the activities of each role.
- Empower your internal departments with education on how to avoid violating industry rules and government laws.
TD bank refreshed staff knowledge of how to follow the latest NACHA Rules and government regulations. For example, if an internal department debits consumers’ bank accounts via ACH, it must follow the consumer protection requirements in the NACHA Rules and Regulation E.
- Create processes where internal departments review risks before launching new payment processing initiatives.
By empowering its internal departments, TD Bank increased employees’ proactive risk management. Now employees throughout the bank come to the centralized risk management department with their new initiatives and approach to risk.
- Centralize governance of money movement.
Years ago when an internal department wanted to move money, they called a centralized Operations department. The advent of front-end online systems gave internal departments access to initiate money movement themselves. With money movement happening in a decentralized process, there needs to be centralized governance.
- Use controls to spark conversations.
When controls identify that payment volumes fluctuate beyond defined norms, it sparks a conversation. The internal department should identify whether there is new activity, growth or a possible error. For example, by putting limits on internal departments' ACH Files, overlimit situations require a review.
Related Blog Posts
European Banks Have the Right Tools to Stay Ahead – But Will Big Tech Overtake?
Open banking and immediate payments have come a long way, according to the panellists who joined me during the ‘Open Banking in an Instant World’ session at EBAday in Stockholm recently. The building blocks are now falling into place through the introduction of national and regional schemes, open banking initiatives, regulations such as PSD2 and the acceptance and use of APIs.
Checkout Optimization Challenges: Top Tips for Online Merchants
As the current conference season draws to a close, it’s time to reflect on one of the key topics topping the agenda for many online merchants: checkout optimization.
How Banks and Acquirers Can Deliver on the Benefits of PSD2 SCA Exemptions and Differentiate Their Merchant Services
PSD2 is an opportunity for acquirers to differentiate themselves by delivering improved services to their merchants, if they implement modern solutions to manage SCA exemptions. This will drive the best customer experience in combination with regulatory compliance.
How UPI is Driving India's Shift from Cash to Digital Payments
The Indian economy has traditionally been heavily dominated by cash, while experiencing low adoption of various online payment systems including National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) and inter-bank mobile payments. The dominance of cash is evidenced by the ratio of cash withdrawals at ATMs vs debit card usage at Point of Sale (POS)—ATM transaction volume is more than 2x greater than POS.
Cooperation, Consultation and Collaboration Are the Keys to Countering CNP Fraud in Australia
As Europe, and other parts of the world ramp up for regulatory changes around PSD2, Australia is about to launch its own strategy to combat Card Not Present (CNP) fraud.
PSD2 and Strong Customer Authentication – What's in Store for Merchants?
With the final pieces of the Payment Services Directive (PSD2) puzzle coming together, payments businesses are highly focused on meeting their compliance obligations. But the forthcoming changes will affect everyone in the payments chain – and it’s important for merchants and PSPs to understand the practical implications for their businesses and customer relationships.
Transforming Telecom Companies in a Retail World
The recent MVNO World Congress in Amsterdam brought fascinating insights into the changing telecom industry, particularly around the opportunities that lie ahead for Mobile Virtual Network Operators (MVNOs) and how they can they can cement their position in today’s fast-paced climate.
Success Speaks: Surprising New Ways Students Want to Pay
Colleges and universities are facing the dual tasks of accommodating not only new payment methods, but also a new generation of students, Gen Z, whose expectations differ greatly from even millennials. How can higher education institutions meet these demands?
In our latest Success Speaks webinar, experts from Temple University, FutureCast, ACI and MTFX Group of Companies explored today’s payments landscape for colleges and universities, payment desires of Gen Z, innovations the higher education sector is already implementing and how schools can better assist with international payments.
Women Must Choose to Rise Up Despite Past, Current and Future Circumstances
Money20/20, Europe’s biggest payments and fintech event, was recently held in Amsterdam and featured Rise Up Money20/20, a global program designed to address the gender imbalance in leadership positions within the financial services and fintech industries. A cohort of 30 female professionals was selected to take part in an exclusive curated agenda, complete with a series of bespoke content sessions, one-to-one mentoring and unique networking opportunities.
Beyond Borders: Navigating the Challenges of eCommerce Expansion
eCommerce continues to flourish, with impressive growth figures year after year. In 2018, global online sales reached almost $3 trillion, and are expected to hit $4 trillion by the end of 2020.
Despite eCommerce taking an increasing slice of the retail pie (which could now be as high as 15 percent according to recent figures), it is increasingly challenging, with competition and cost pressures creating significant issues for merchants of all sizes.