Visa Partners with Top UK Banks to Revamp Account-to-Account Payments
Visa Inc. is collaborating with major UK banks to revolutionize the management of account-to-account payments, addressing the issue of billions lost due to problematic transactions. This initiative involves key financial institutions such as Barclays Plc, Lloyds Banking Group Plc, HSBC Holdings Plc, and others, aiming to create a more secure and user-friendly system for handling disputes related to bank transfers.
Introducing a New Dispute Resolution System
Visa is set to launch a new formal process for disputing bank transfers. Expanding beyond credit and debit cards, Visa is now enhancing direct debit—an automated method for recurring payments. This move underscores Visa’s commitment to refining the direct debit experience, which, while convenient, has faced issues with errors and fraud.
Addressing the Surge in Fraud and Payment Issues
Direct debit usage has soared, enabling faster payments and minimizing late fees. Last year alone, UK consumers utilized account-to-account technology to process approximately £3.7 trillion ($4.9 trillion) in transactions. However, this rise has also led to increased instances of fraud, unauthorized renewals, and limited flexibility in managing payments. Charlotte Hogg, Visa’s Head of European Operations, noted that while direct debit is widely used, it still represents “a less-than-optimal payment experience.”
Tackling Fraud in the UK Payment Landscape
The UK, known for its sophisticated payment systems, also grapples with high levels of fraud related to account-to-account transactions. Visa has been working with Pay.UK, the nonprofit overseeing the UK’s direct-debit and faster-payment systems, to implement fraud prevention measures.
Upcoming Regulatory Changes and Industry Feedback
Regulators propose lowering the maximum reimbursement cap for fraud victims from £415,000 to £85,000. While this new cap will cover over 99% of claims, some industry leaders, including Innovate Finance CEO Janine Hirt, have criticized it for permitting reimbursement in cases of consumer negligence. The Payments Association also argued that a £30,000 cap would have been more appropriate.
Consultation and Final Decision
The Payment Systems Regulator (PSR) has initiated a two-week consultation period for banks and payment firms, which will end on September 18. The PSR plans to announce its final decision by the end of September, with new regulations set to take effect on October 7.
Through its collaboration with leading banks and the introduction of new regulatory measures, Visa is taking significant steps to enhance the safety and efficiency of account-to-account payments in the UK.