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About


Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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January 24, 2022

The Role of Cryptocurrency and Cryptoinsurance in Ransomware Payments

In the Risk Forum's end-of-the-year Talk About Payments webinar video file, ransomware was once again, unfortunately, a topic of discussion. For over five years now, our Take on Payments blog has often discussed ransomware, as financial losses due to ransomware attacks have steadily risen. In 2021, the federal government and the US Department of the Treasury issued guidanceOff-site link for the virtual currency industry in an effort to make it difficult for those behind ransomware attacks to receive cryptocurrency, the preferred ransom payment method. Whether or not these steps, or even an outright ban on cryptocurrency payments, will be effective in reducing ransomware attacks and their associated financial losses is still to be determined, but there are skepticsOff-site link (including yours truly).

In 2019 posts (here and here), Dave Lott and I both wrote about the increasing frequency of people and companies obtaining insurance against ransomware attacks and the payment of ransoms by insurance companies. I think it is time for an evaluation of the costs and benefits of ransomware insurance. In fact, the FBI strongly recommends that ransomware payments not be made.

What are the basics? Organized crime syndicates, generally based in foreign countries, launch the vast majority of ransomware attacks. To protect against the financial consequences of such attacks, businesses may purchase insurance policies for coverage against cyber-related attacks that can include the payment of ransom in the event of a ransomware attack. If a syndicate receives a ransom payment, it not only encourages additional attacks but also allows the syndicate to grow and scale its criminal enterprise. As ransomware attacks flourish, businesses might become more likely to purchase insurance policies or expand existing policies with greater coverage to protect themselves. Another important issue to consider is whether companies that insure against ransomware as a form of protection could become less diligent in preventing an attack. Further, with increased attacks and higher demand for coverage, insurance providers may sell more policies at increased premiums to offset the potential for rising claims. Or perhaps the problem becomes so significant that the costs to insurers from claims outpaces their revenue from such policies, causing them to exit the business.

In a different viewpointOff-site link, maybe insurance coverage that includes ransom payments is in fact beneficial, especially in those circumstances when the "the damage inflicted by a cyber attack is greater than the cost of the ransom."

Over the past five years, since the Risk Forum began covering ransomware, we have witnessed significant growth in attacks and financial losses. While I am hopeful that both the public and private sector will find ways to slow the growth and ultimately stamp out ransomware attacks, the challenge is perhaps more daunting now than it was five years ago. It's promising to know that efforts are underway at the Treasury to address the challenge of ransom payments made with crytpocurrencies, but more may need to be done. As for this post, I am hoping that it can lead to a discussion on the pros and cons of this mitigation strategy as part of the effort at large to defeat ransomware.

January 17, 2022

Federal Reserve Payments Study Finds Effects of the Pandemic in US Payments

It's the week before the New Year, and we promised not to post this week. But I can't resist letting you know that a new report from the Federal Reserve Payments Study reports quarterly data related to the effects of the COVID-19 pandemic on US payments. This is interesting and important news, so I'm breaking the holiday hiatus.

Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments Study, on the Federal Reserve's websiteOff-site link, includes new information about core noncash payments and some evolving areas of payments:

  • While data from 2019 largely show a continuation of past payment trends, with card and ACH both gaining share at the expense of check, 2020 data show that payment behavior changed sharply with the COVID-19 pandemic, with ACH gaining substantially as a share of noncash payments by both number and value.
  • The share estimates combined with other information imply that ACH was the only one of the three core payment systems to grow by number in 2020.
  • The total number of card payments declined in 2020, driven by a marked decline of in-person card payments. This was the first annual decline in the number of card payments recorded by the payments study.
  • As in-person card payments dropped in spring 2020, remote card payments took up much of the slack. Later in the year, in-person card payments recovered somewhat.
  • The pandemic may have helped spur growth of innovative payment methods, such as in-person contactless card, digital wallet, and person-to-person (P2P) payments.
    - First-time use of bank-sponsored P2P payments spiked in the second quarter of 2020, a time of business closures and stay-at-home orders.
    - First-time use of digital wallets was highest in the third quarter, when some restrictions on in-person shopping were lifted. When used with a mobile device, a digital wallet provides a low-touch option for in-person card payments.

The report covers card (credit, non-prepaid debit, and prepaid debit), ACH, and check payments.

Go to the Federal Reserve's websiteOff-site link to see other findings.

Happy new year! We look forward to continuing the payments conversation with you in January 2022!

January 10, 2022

What We'll Be Watching in 2022

At our end-of-the-year Talk About Payments webinarvideo file in December, we noted that the global pandemic has touched every aspect of our personal and professional lives. The tragic loss of life, risk of illness, surge in remote work, restrictions on or shutdowns in business operations, and supply chain disruptions: these are the factors that affected the behavior of consumers and businesses.

As we enter 2022, none of us knows what lies ahead for consumer payments behavior. After all, as one Nobel prize-winner said, "We are prone to overestimate how much we understand about the world and to underestimate the role of chance in eventsOff-site link."

For that reason, we are not making any predictions when it comes to payments. Instead, each of us in the Retail Payments Risk Forum will be closely watching the trends and issues in 2022. Throughout the year, we will blog on these items based on research from the Federal Reserve or external sources.

  • Nancy Donahue: As the United States continues to expand and improve broadband infrastructure, I am interested in the long-awaited 5G rollout currently scheduled to begin January 19. As we start the year with a return to virtual learning in some school districts and continued remote work for many people in the labor force, access to high-speed broadband internet remains on the forefront as an important component of financial and economic inclusion.
  • Claire Greene: Flashing my phone or tapping my watch is fun, but I'm enamored of the information content that flows along with newer ways to pay. So for 2022, I'm excited about QR codes. Increasingly since March 2020, QR codes have shown their value as a physically distanced information delivery system. I can access menus, maps for museums and walking trails, theater programs, even my vaccination card. My question for next year is: In the United States., will QR codes become a popular way to pay?
  • Scarlett Heinbuch: Cash—its preservation, usage, and merchant acceptance—remains an interest area to watch in 2022, along with the rise of digital currency. I am interested to see how these payments streams converge and coexist in the coming years.
  • Mary Kepler: Although contactless payments have been around for quite some time, the concept didn't seem to catch on in the United States until the pandemic provided a reason to avoid touching things. I'll be watching for the tap-to-pay trend, and other contactless applications, to continue to grow.
  • Doug King: The evolution of buy now, pay later (BNPL) as well as the emergence and growth of account-to account paymentsOff-site link in retail.
  • Dave Lott: Since its peak in the second quarter of 2020 at 16.1 percent, ecommerce sales as a percentage of overall retail sales has remained strong. Still, it has declined to 120 basis points over its prepandemic level of 11.8 percent. What levels will in-person shopping reach as we start another year still in the throes of the pandemic? Related to that payment behavior, how will third-party delivery services be affected?
  • Catherine Thaliath: With the acceleration of digitization efforts in business-to-business payments, I am curious to see what the future holds for accounts payable/accounts receivable automation, paper checks, virtual cards, etc.
  • Jessica Washington: Risk and fraud mitigation techniques and tools are what I’m watching. We have been seeing rapid growth and adoption of innovative payment services. The payments industry, including banks, fintech and regulators, will need to keep pace and work together on how we fight fraud and mitigate risks.

So, what are your "must watch" payments issues and trends for 2022? Let us hear from you.

Happy new year from the Risk Forum team!

Photo of RPRF

December 27, 2021

Federal Reserve Payments Study Finds Effects of the Pandemic in US Payments

It's the week before the New Year, and we promised not to post this week. But I can't resist letting you know that a new report from the Federal Reserve Payments Study reports quarterly data related to the effects of the COVID-19 pandemic on US payments. This is interesting and important news, so I'm breaking the holiday hiatus.

Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments Study, on the Federal Reserve's websiteOff-site link, includes new information about core noncash payments and some evolving areas of payments:

  • While data from 2019 largely show a continuation of past payment trends, with card and ACH both gaining share at the expense of check, 2020 data show that payment behavior changed sharply with the COVID-19 pandemic, with ACH gaining substantially as a share of noncash payments by both number and value.
  • The share estimates combined with other information imply that ACH was the only one of the three core payment systems to grow by number in 2020.
  • The total number of card payments declined in 2020, driven by a marked decline of in-person card payments. This was the first annual decline in the number of card payments recorded by the payments study.
  • As in-person card payments dropped in spring 2020, remote card payments took up much of the slack. Later in the year, in-person card payments recovered somewhat.
  • The pandemic may have helped spur growth of innovative payment methods, such as in-person contactless card, digital wallet, and person-to-person (P2P) payments.
    - First-time use of bank-sponsored P2P payments spiked in the second quarter of 2020, a time of business closures and stay-at-home orders.
    - First-time use of digital wallets was highest in the third quarter, when some restrictions on in-person shopping were lifted. When used with a mobile device, a digital wallet provides a low-touch option for in-person card payments.

The report covers card (credit, non-prepaid debit, and prepaid debit), ACH, and check payments.

Go to the Federal Reserve's websiteOff-site link to see other findings.

Happy new year! We look forward to continuing the payments conversation with you in January 2022!