UK payments industry identifies APP fraud as top threat

The findings are a result of an extensive financial crime survey conducted by The Payments Association. APP fraud involves deceiving individuals into transferring money under false pretences, such as through fake websites or misleading communications impersonating legitimate entities. Recent data indicates that APP fraud losses reached GBP 459.7 million, which is down five per cent compared to last year. This comprised GBP 376.4 million of personal losses and GBP 83.3 million of business losses. Despite varying tactics, all instances of APP fraud exploit the Authorised Push Payment system widely used for daily transactions. 

The survey, distributed among key decision-makers including CEOs and founders from various segments of the payments industry, revealed that 65% identified fraud as a critical challenge in the upcoming year. Among 13 types of fraud outlined, APP fraud was singled out by 27% of respondents as particularly detrimental. 

Representatives from The Payments Association highlighted the scale rather than sophistication of APP fraud. They also mentioned the ease with which fraudsters can target large numbers of individuals, exploiting vulnerabilities stemming from data breaches and societal trust.

Responding to the threat 

In response to these threats, the Payment Systems Regulator (PSR) has mandated that payment service providers share liability for losses due to APP fraud, with measures being implemented across the industry to mitigate risks. However, concerns have been raised about the potential financial burden on smaller firms and the overall impact on market competition and innovation. 

The Payments Association recently communicated these concerns to the interim Managing Director of the PSR, following leadership changes within the regulatory body. They advocate for adjustments to the reimbursement thresholds and urge governmental intervention to ensure regulatory frameworks support growth and competitiveness in the UK payments industry. 

Founded as the Emerging Payments Association and now known simply as The Payments Association, the organisation plays an important part in supporting collaboration across the payments ecosystem. In essence, it engages with stakeholders including regulatory bodies and industry leaders to address challenges and drive sustainable solutions.