UK payment firms are challenging new plans to protect victims of Authorized Push Payment (APP) fraud, arguing that a proposed refund cap of £415,000 could harm smaller providers.
APP fraud, a rapidly escalating issue in the UK, resulted in nearly £500 million in losses last year. Consumer groups and politicians have been pressing banks to address the epidemic and expedite reimbursements for innocent victims.
The Payment Systems Regulator (PSR) has announced a “step-change” in fraud protection starting this October, setting a maximum reimbursement level of £415,000 to ensure the majority of money lost to APP fraud is returned to victims.
However, the Payments Association, an industry group, has written to Economic Secretary to the Treasury, Bim Alami, expressing concerns about the cap. The letter, signed by around 30 firms, describes the cap as “simply not proportionate” and suggests a lower cap of £30,000, which aligns with the average APP fraud loss. The letter also cautions that refund systems may not be prepared by the October deadline.
The pushback from payment firms highlights the ongoing debate over the best way to balance consumer protection with the operational capacities of financial service providers.