Payment rails explained: security risks in real estate

Real estate transactions rely on various payment rails to move billions of dollars every day. Understanding these rails is crucial for identifying and mitigating security risks.

What are payment rails?

Payment rails are the underlying infrastructure that facilitates the transfer of money between parties. In real estate, the most common rails are Fedwire (Wire Transfers), ACH (Automated Clearing House), and increasingly, RTP (Real-Time Payments) and FedNow.

Fedwire: The Gold Standard and the Primary Target

Fedwire is the preferred rail for real estate because it is fast and final. Once a wire is sent, it cannot be reversed. This "finality" is exactly why it is the primary target for fraudsters. If a scammer can trick you into sending a wire to their account, the money is usually gone forever within minutes.

ACH: Slower but still risky

ACH transfers are often used for earnest money deposits. While ACH allows for reversals in some cases (unlike wires), the reversal process is complex and not guaranteed. Fraudsters use ACH to test the "plumbing" of a transaction before going after the larger closing wire.

The Future: Real-Time Payments (RTP) and FedNow

Newer rails like FedNow offer 24/7/365 real-time clearing. While they provide efficiency, they also increase the speed at which fraud can occur. As the industry moves toward these instant rails, the need for pre-transaction verification like CertifID becomes even more critical.