FedNow and Jack Henry: Dancing in Sync to Defend Against Fraud

If you’ve ever watched professional ballroom dancers glide across a floor, you know the magic of perfect coordination. Each step, each turn, each flourish is executed with precision and trust. It’s not just beautiful, it’s strategic.  

Jack Henry’s™  work with the Federal Reserve over the past several months to enhance fraud mitigation on FedNow^® reflects the same level of precise choreography.  

Through our JHA PayCenter™ faster payments hub and the Jack Henry Financial Crimes Defender™ fraud and BSA compliance platform, we’re helping pilot a new network intelligence tool – designed to improve how financial institutions or their third-party service providers (TPSPs) assess transaction risk before payments are sent. 

Smarter Data, Smarter Decisions 

At the heart of this initiative is a network intelligence API that allows sending financial institutions or their TPSPs to request data insights about a receiver account before initiating a payment. This pre-check provides valuable context that helps institutions better evaluate transaction risk. 

Once the network intelligence tool delivers these insights, the JHA PayCenter orchestration engine will share insights and data elements with Jack Henry Financial Crimes Defender and other third-party fraud tools, resulting in more accurate and timely fraud detection. We’re currently in the planning stages for implementing this new capability.  

Coordinated Fraud Prevention

Fraud mitigation is not the responsibility of any one institution. It requires coordination across all participants in the transaction – including sending institutions, receiving institutions, TPSPs, and the FedNow network itself. The Federal Reserve plays a critical role by providing network-level visibility that no single organization can achieve alone. 

As Nick Stanescu, Chief FedNow Executive, recently said, “While our customers tell us they've seen little evidence of fraud on the FedNow Service network to date, helping them combat fraud is a high priority for us. We continually collaborate with financial institutions and others in the industry to develop new features and functionality that help reduce risk.” 

ScamClassifier^SM and FraudClassifier^SM: Building a Smarter Network 

To further strengthen fraud reporting and intelligence sharing, FedNow recently integrated the ScamClassifier model into its fraud reporting process. This complements the existing FraudClassifier framework and allows institutions to report suspicious transactions with greater specificity, identifying the exact type of scam involved. 

To fully leverage these tools, financial institutions will need to train their teams on how to use both ScamClassifier and FraudClassifier effectively. “These frameworks provide a standardized language for describing fraud and scams, enabling institutions to contribute structured, actionable data to the network. Utilizing the same taxonomy between financial institutions is a step forward in being able to create a new fraud detection ecosystem to battle the ever evolving threat of fraud,” explains Rene Perez, a financial crimes industry expert from Jack Henry and member of the Federal Reserve Work Group that helped define and create the Classifier models.   

This shared intelligence helps the entire ecosystem become smarter about fraud attacks. It also supports the development of network-wide metrics, trend analysis, and targeted prevention strategies. Institutions that invest in training and consistent reporting will be better equipped to identify emerging threats and protect their customers. 

The Future of FedNow Fraud Prevention and Instant Payments Security

For community banks and credit unions, this initiative represents a meaningful step forward. By integrating JHA PayCenter and Financial Crimes Defender with FedNow’s network intelligence capabilities, Jack Henry is helping these institutions access deeper insights and stronger fraud defenses. 

And just like a well-rehearsed ballroom routine, the success of this initiative depends on trust, timing, and teamwork. Fraudsters still treat deception as a full-time job, but with institutions working together and sharing intelligence, they’ll have to work much harder to find a chink in our collective armor. 

Here’s to dancing the night away ... securely, confidently, and always in step. 

Curious about how instant payments stack up against other payment types when it comes to risk? Find out in our recent blog post.