Open Banking’s Instant Payments Can Lead to Instant Fraud
Open banking is transforming the financial landscape in emerging markets, unlocking a wave of innovation and accessibility. Brazil’s Pix and India’s UPI are two standout examples, each enabling fast, bank-to-bank transfers that bypass traditional card networks. These systems are driving financial inclusion, lowering transaction costs, and creating new business models almost overnight.
One of the most prominent use cases is Pay by Bank, also known as Account-to-Account (A2A) payments. Merchants love it for the low fees and guaranteed settlement. Banks benefit from direct user engagement and the ability to bypass card intermediaries. But there’s a flip side: risk.
As some in the industry put it, instant payments can lead to instant fraud.
When money moves in real time, so can fraud. Unlike card payments, A2A transfers are often irrevocable and settle immediately. This leaves little room for chargebacks or fraud detection after the fact. Criminals know this and have shifted tactics accordingly, leveraging phishing, social engineering, and SIM swapping to intercept or initiate unauthorized payments.
To counteract this, many banks have begun to introduce multiple layers of authentication. Users may be asked to approve payments via mobile apps, enter OTPs, respond to biometric prompts, or confirm via push notifications. While these steps aim to improve security, they also increase friction, slow down conversions, and frustrate users—especially during peak usage times.
This tension between speed and security is at the heart of the open banking UX challenge.
At Ideem, we believe users shouldn’t have to choose between convenience and safety. Our authentication module enables a One-Click Checkout experience that’s both seamless and secure. Much like Apple Pay or Google Pay, the user remains inside the merchant’s app. A secure webview slides up briefly to perform a silent, device-bound two-factor authentication, then disappears.
No redirects. No OTPs. No second-guessing.
This model not only improves the user experience but also removes reliance on vulnerable channels like SMS, which are increasingly targeted in mobile-based fraud. By embedding secure authentication into the flow itself, merchants and banks can unlock the full potential of open banking without compromising on safety or speed.
As instant payments become the norm, authentication must evolve in parallel. It’s the only way to make “instant” safe—for everyone involved.
Sources:
- Banco Central do Brasil, “Pix: O sistema de pagamentos instantâneos”
https://www.bcb.gov.br/en/financialstability/pix - National Payments Corporation of India (NPCI), “Unified Payments Interface (UPI)”
https://www.npci.org.in/what-we-do/upi/product-overview - Financial Times, “Brazil’s Pix leads global charge on real-time payments”
https://www.ft.com/content/4c2de974-4791-4f4f-81c4-3c19ef0933e7 - The Hindu BusinessLine, “Rise in UPI-related frauds a concern, says RBI official”
https://www.thehindubusinessline.com/money-and-banking/rise-in-upi-related-frauds-a-concern-says-rbi-official/article66761042.ece - FIDO Alliance, “One-Time Passwords (OTPs) Are No Longer Enough”
https://fidoalliance.org/one-time-passwords-are-no-longer-enough/
