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This development comes a week after the UK payments group called on Chancellor Rachel Reeves to impose a ‘Tech Levy’ on social media giants, holding them accountable for the impact of payments fraud originating from their platforms.
Starting October 2024, payment services providers (PSPs) in the UK will be required to reimburse consumers who fall victim to an Authorized Push Payment (APP) scam when using Faster Payments. The reimbursement will be equally shared between the sending and receiving PSPs.
The Payments Association has addressed concerns to the new Economic Secretary to the Treasury and City Minister, highlighting that the Payment Systems Regulator’s (PSR) rules could undermine competition, stifle innovation, reduce investment, and force smaller players out of the UK market. This could also lead to increased levels of de-banking, particularly affecting vulnerable and underbanked consumers.
The association has requested a phased approach to implementation, advocating for a per-claim upper liability threshold that is more proportionate to average losses. Specifically, they propose reducing this threshold from £415,000 to £30,000. Additionally, they call for bi-annual reviews to assess the reimbursement scheme’s impact on economic growth, competition, innovation, and fraud levels.
Riccardo Tordera, director of policy at The Payments Association, stated: “Fintech is the future of financial services and we are ready to contribute to the growth agenda. However, we need the regulatory changes we have been requesting for months. Effective regulation allows responsible risk-taking, which in turn drives good behaviors. This is the only way to achieve sustainable growth. The new government must show strong leadership and deliver growth, not just talk about it.”
Tony Craddock, director general of The Payments Association, added: “We appreciate Labour’s commitment to tackling fraud, but words must be matched by actions. Fraud impacts every department of state, yet lacks a clear departmental lead. It is everybody’s problem and nobody’s priority. We would welcome the appointment of a dedicated Minister to coordinate cross-departmental actions. Anti-fraud measures require a collective effort from the government, law enforcement, payment providers, retail, the technology sector, and consumers.”
Regarding the call for a ‘Tech Levy’, Craddock continued: “We welcome the news that Labour has drafted plans to make tech companies liable to reimburse victims of online fraud. This marks a significant shift from the current rules and addresses a crucial aspect of combating fraud.”
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