Fintech wrap: Calls for UK fraud rules delay, US push for inclusive faster payments

Our pick of the week’s fintech stories.

Following a leadership change at the UK Payments System Regulator (PSR), the Payments Association is now calling for a postponement to planned authorized push payment (APP) rules.

“This move by the PSR represents a prime opportunity to re-set the relationship between the payments industry and one of its most important regulators,” Tony Craddock, Director General of The Payments Association, said.

“We believe that to mitigate systemic risk and prevent damage to the payments industry from some of the PSR’s current plans, significant changes are needed.”

A delay in the implementation of the rules by a year would allow the industry to “ensure the right policies, technology and systems are in place to avoid permanent damage to the UK’s payment industry”, the Payments Association said. This refers to the potential impact on smaller fintechs.

UK Finance found that, overall, fraud decreased 4% in 2023, with banks preventing fraud to the tune of £1.25 billion ($2.58 billion) in total. Losses due to unauthorized transactions across payment cards, remote banking, and cheques amounted to £708.7m ($900m) in 2023, down 3% compared to 2022.

The government said in June 2023 that APP fraud continues to be a priority for the FCA and that it will proactively consider a range of potential policy initiatives to tackle the scale and impacts associated with this type of crime, both for victims and the firms that it regulates.

The government said it was legislating to enable the PSR to use its regulatory powers to require reimbursement by all PSR-regulated PSPs in relation to the Faster Payments System, where 97% of APP frauds reportedly occur. 

More work needed on inclusive payments

To better understand how ready firms are for faster payments and to gauge financial inclusion, the US Faster Payments Council (FPC) conducted a survey of financial institutions, payments providers and businesses.

The results showed that 56% of respondents were already using integrated faster payments, with 55% offering this free of charge – 35% planned to speed up future payments.

The majority (two thirds) of financial institutions don’t offer cross-border faster payment solutions. Delayed payments to those residing outside the US means they are harder to track.

Key challenges include addressing the needs of low-income consumers who often face higher costs and barriers when accessing financial services​​ and a need for improved testing, validation, and customer confirmation practices to ensure that faster payments systems are both secure and user-friendly for all segments of the population.

The report emphasized the need for continued innovation and adaptation within financial institutions to bridge the gap in financial inclusion through faster payments. Collaboration among industry stakeholders, policymakers, and technology providers is crucial to developing more inclusive payment systems.

“The FPC is committed to helping foster an inclusive financial ecosystem,” Reed Luhtanen, Executive Director, FPC, said. “This survey report provides valuable insights that will guide our members in creating faster payment solutions that truly serve the needs of all consumers, leading to a more equitable financial landscape.”