The news: The UK’s Payment Systems Regulator (PSR) proposed requiring banks to reimburse authorized push payment (APP) fraud victims within 48 hours under most circumstances, per Finextra.
The PSR said it wants to see the requirements for mandatory APP fraud reimbursement implemented “as soon as possible.”
Why it’s worth watching: Peer-to-peer (P2P) payments are popular across the UK—but the payment method faces a growing fraud problem.
The number of UK mobile P2P payment users is expected to hit 18.1 million in 2022, up from 17.1 million last year, according to Insider Intelligence forecasts. Fraud—particularly APP fraud—has hindered P2P payments growth in the UK.
APP fraud losses in the UK reached £583.2 million ($802 million) in 2021, up 39% from the year before, per UK Finance. But only about 47% of those losses were reimbursed to victims. This has shaken consumer confidence in P2P payments and mobile wallets: Thirty-four percent of UK consumers have little or no trust in wallets, per Transact.
What this means: The PSR’s proposal is a clear mandate for APP fraud reimbursement. Combined with steps that banks have taken, it creates stronger guardrails for consumers.
While these efforts can help mitigate APP fraud, PSR rules can have a bigger impact on the industry and support stronger P2P payments adoption over time.
Regulators across the pond, take note: The PSR’s APP fraud proposals can serve as a model for the US, where lawmakers like Sen. Elizabeth Warren (D-MA) are pushing for banks to reimburse APP fraud victims. Some US bank executives are reluctant to do so, fearing some consumers may try to report false fraud claims. But APP fraud prevention efforts from the UK may provide a blueprint for future rulemaking.
Note: These conversions are based on the average daily rate from 2021; we plan to update in the coming weeks to reflect current conditions.
Related content: Check out our “UK Mobile Payments” report to learn more about the state of mobile payments in the UK.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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