Consumers and organizations have a variety of options for making and receiving payments. While these payment types share the ultimate goal of transferring funds from payer to payee, the path those funds travel and the approaches employed for safely and securely completing transactions vary. The Secure Payments Task Force developed the Payment Lifecycles and Security Profiles as an educational resource and to provide perspectives related to:
- The lifecycles of the most common payment types, covering enrollment, transaction flow and reconciliation
- Security methods, identity management controls and sensitive data occurring at each step in the payment lifecycles
- Relevant laws and regulations, and other references, as well as challenges and improvement opportunities related to each payment type
The profiles employ a consistent format for describing the lifecycle of each payment type. The lifecycle template is not designed to represent the nuances of specific payment transaction flows, but as a broad taxonomy that can be applied across different payment types for understanding and comparing controls and risks. The profiles are not all-encompassing in describing the layered security strategies that may be employed by specific networks, providers or businesses and shouldn’t be considered an assessment of overall security of different payment types. The improvement opportunities noted in the profiles highlight areas for further industry exploration and are not intended as guidance or specific solutions to be implemented.
These valuable resources were developed through the collaborative efforts of more than 200 task force participants with diverse payments and security expertise and perspectives. It is the hope of the task force that by helping industry stakeholders better understand these payments processes, the security and risks associated with these processes, and potential improvement opportunities, they will be well positioned to take action to strengthen their payment security practices.
Note: These materials were created by the Secure Payments Task Force and are intended to be used as educational resources. The information provided in the Payment Lifecycles and Security Profiles does not necessarily reflect the views of any particular individual or organization participating in the Secure Payments Task Force. The document is not intended to provide business or legal advice and is not regulatory guidance. Readers should consult with their own business and legal advisors.
Feedback and/or questions related to the Payment Lifecycles and Security Profiles can be submitted by using the “provide feedback” form.
Enrollment
Payer ID / Enrollment
Enrollment of a payer includes identity (ID) proofing, management of users (enrollment, de-enrollment, and changes) and determination of authority based on role
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
The originator’s financial institution validates the originator’s identity at the time of onboarding an account.
Overview of Security Methods and Associated Risks
Security Methods
Financial institution verifies the individual during enrollment before opening an account.
Know Your Customer (KYC), Customer Identification Program (CIP) background checks, etc.; ID verification of a ‘carbon-based lifeform’
Employee training
Risks
Inconsistent controls for user-identification vetting, monitoring and verification when initiating wire transfers.
Lack of Know your Customer (KYC) identification programs for correspondent banks
Financial institution legacy accounts may lack Know Your Customer (KYC).
Social engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Synthetic Identity: Use of stolen identity information combined with fraudulent information to create a new ‘synthetic’ identity which is used to open fraudulent accounts and make fraudulent purchases. Strong enrollment processes may help mitigate synthetic identity risk throughout the transaction process.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted
Sensitive data used to enroll or open an account:
Name
Date of Birth Address
Social Security Number
Demand Deposit Account Number (DDA)
Login Credentials
Personal Identification Number (PIN)
Biometrics
Email Address
Risks Associated with the Sensitive Payment Data
If compromised, this data can be used to fraudulently set up an account at a financial institution and be used for other identity theft crimes.
Payee ID / Enrollment
Enrollment of a payee includes identity (ID) proofing, management of users (enrollment, de-enrollment, and changes) and determination of authority based on role
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Originator provides the information identifying the beneficiary and the beneficiary’s financial institution. The originator’s financial institution is obligated to adhere to compliance requirements (e.g. AML/BSA) prior to the wire being released.
Overview of Security Methods and Associated Risks
Security Methods
Know Your Customer (KYC) and Customer Identification Program (CIP)
Employee training
Risks
Synthetic Identity: Use of stolen identity information combined with fraudulent information to create a new ‘synthetic’ identity which is used to open fraudulent accounts and make fraudulent purchases. Strong enrollment processes may help mitigate synthetic identity risk throughout the transaction process.
Transaction*
Payer Authentication
Verification of the payer when originating payments
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Determined by the originator’s financial institution and may be in-person, phone, internet banking or email to confirm it’s an authorized individual.
Call-back procedure using phone number on record and/or authentication code may be used.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Initiation: Access Mode / Network
Environment in which the payment origination is requested
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Financial institution may take a request in-person, over the phone, via internet banking, etc.
May include recurring wire agreements.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Initiation: Device / Method Used to Initiate Payment
Type of interaction or device used to enter payment account information
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
In-person, phone, fax, email or internet- accessible device (desktop, laptop, mobile)
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Initiation: Funding Account for Payment
Entry and/or identification of the funding account (with format checks)
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Cash, debit to an account, or any other means acceptable by the participating financial institution.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Initiation: Payment Initiation Mechanism
Payment network, system and/or third-party accessed
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Connection to a proprietary network, SWIFT, correspondent bank, Fedwire Funds Service, CHIPS, or funds transfer processors.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Payer Authorization: Payment Network Traversed
“Rails” used to route authorization requests to the holder of the funding account
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Payer Authorization: Transaction Authorization
Determination of whether to approve or decline a transaction including authorization time-frame, obligations, and any recourse decisions
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Every receiving financial institution in the wire payment flow is responsible for authenticating and authorizing its originator.
Originator’s financial institution verifies cash or balance is sufficient for transmission. Once transmitted, the originator’s financial institution has little to no recourse and the beneficiary’s financial institution may give immediate cash credit for funds received.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Format Exchange
Payment instructions, rules, and formatting
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Proprietary formats for wire are used but mapping mechanisms are well-established to help facilitate straight-through processing.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Receipt: Acknowledgement / Guarantee
Notification and confirmation of payment completion including terms for use
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Receiving financial institution does not necessarily provide acknowledgement of receipt to originating financial institution.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Payee Authentication
Mode of access to funds (or accounts)
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Every receiving FI in the wire payment flow is responsible for authenticating and authorizing its originator.
Beneficiary is verified by the beneficiary’s financial institution, either through on-site verification or through an established account at the beneficiary’s financial institution.
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Clearing and Settlement: Settlement / Exchange of Funds
Actual movement of funds to settle funding arrangements and applicable fees
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
Each payment obligation that arises between financial institutions in the funds transfer chain settles according to the laws and funds transfer rules that govern the transfer. While settlement is generally final at the time it occurs, if the overall funds transfer is not completed, a financial institution that has settled a payment obligation is entitled to get its money back.
Settlement occurs between the originator’s financial institution and the beneficiary’s financial institution in accordance with established agreements. .
Overview of Security Methods and Associated Risks
Security Methods
UCC 4A Security Provisions
Financial institution authentication of customer
Authentication methods include: out-of-band, two-factor
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization/decline capabilities among others.
Employee training
Consumer and corporate customer education
Payment initiation mechanism: mutual authentication between the originating financial institution and the receiving financial institution
Established wire limits (including additional security checks based on dollar amount)
Dual approval of transactions
Client training and education
As payments and technology continue to change, risk-based authentication is a way to continually evaluate and apply optimal security methods.
Risks
Authentication method misuse and the assumption that proper enrollment and authentication methods are in place
Account takeover
Social Engineering which could include business email compromise, masquerading fraud, imposter fraud, etc.
Machine Takeover (beneficiary, financial institutions, network/operator, originator)
Email and fax may be used by financial institution customers to communicate with the financial institution.
ABA routing gap
Incorrect information or the lack of pre-processing
Lack of verification for recurring wire agreements
Lack of customer-to-customer acknowledgement (end-to-end)
Inadequately-controlled enrollment often poses additional risk at the time of transaction.
Inventory of Sensitive Payment Data and Associated Risks
Sensitive Payment Data (Data that needs to be protected)
Sensitive payment data must be protected wherever it is processed, stored or transmitted.
Account Holder Data (must be protected wherever it is processed, stored or transmitted):
Originator Account Number
Originator Financial Institution ABA
Originator Name
Originator Address
Originator Phone
Beneficiary Account Number
Beneficiary Financial Institution ABA
Beneficiary Name
Beneficiary Address
Beneficiary Phone
Personal Identification Number (PIN)
Login Credentials
Biometrics
Email Address
Sensitive Addenda Data (must be stored):
Data that may accompany or describe a financial transaction that is not required to process the transaction (e.g. airline or train ticket numbers, hotel confirmations, invoice numbers, insurance policy numbers)
Account numbers
Invoice numbers
Address information
Dollar amount
Government tax information
Risks Associated with the Sensitive Payment Data
Compromised wire data (ABA and account number) can be used by a criminal to create counterfeit checks, fraudulent ACH payments and wire payments.
Additional compromised data could be used for fraudulent account set-up and account takeover (account, invoice and address data).
Lack of access controls, data integrity checks, etc. can be problematic and could result in fraudulent wire activities.
Reconciliation
Reconciliation / Exception Handling
Process and responsibilities associated with reconciling and handling any exceptions or problems with a payment
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
A funds transfer is completed when the beneficiary’s bank accepts. Acceptance by the beneficiary’s bank cannot occur as a matter of law if no person has rights as a beneficiary (i.e., neither name nor account number identify a person entitled to payment). In such a case all prior payment obligations are excused and each party in the funds transfer is entitled to a refund of any amount paid. The beneficiary’s bank may not know that the instructions refer to a nonexistent or unidentifiable beneficiary until after it has received the payment order. Similar outcome for a closed account.
Overview of Security Methods and Associated Risks
Security Methods
Participants in the payment transaction may utilize anomaly and fraud detection tools to help identify risks and mitigate fraudulent transactions. Anomaly and fraud detection tools may include transaction risk scoring, risk-based authentication, transaction history and real-time authorization / decline capabilities among others.
User Protection / Recourse
Applicable rules, regulations, and legal means of recourse
Payment Type Operation
Wire
Note: payment flow may be bidirectional to include reverse wire transactions
UCC 4A contains rules that allocate loss for errors and fraud
Overview of Security Methods and Associated Risks
Risks
Finality of payment if fraud occurs
Last Updated: 02/21/2018
Footnotes
* Generally wire payments flow in one direction