Our Chief Policy and Engagement Officer, Dave McPhee, recently featured on Financial Network Analytics’ broadcast, ‘Consumer Protection and Fraud in Payments’, to discuss Pay.UK’s work, and perspective, on detecting and preventing fraud in an evolving payments landscape and driving better outcomes for end users.
Joining the Payment Systems Regulator’s Oliver Hanmer, who brought a regulatory perspective to the session, Dave spoke about how Pay.UK is shaping the payment ecosystem to align with the regulator’s imperatives to reduce fraud, while fostering innovation and efficiency. This article provides a summary of key findings from the broadcast.
Fraud detection and prevention
Introducing our work to reduce the instance of authorised push payment (APP) fraud and provide better protection for end users, Dave first detailed two key projects of our dedicated Fraud Programme – authorised push payment (APP) reimbursement policy and Confirmation of Payee (CoP) expansion.
APP reimbursement policy
Ahead of its introduction in October last year, we worked extensively with industry to support the PSR APP reimbursement policy’s implementation, and now continue to support and monitor compliance. The policy looks to provide better protections for end users, and reduce the damage caused by financial crime, by reimbursing eligible cases within a five-day timescale.
To complement this work, we have also developed a single system, the Reimbursement Claims Management System, to support payment service providers (PSPs) with compliance, and have already seen an uptick in compliance reporting. Indeed, between 7 October and 31 December 2024, £47 million was reimbursed to end users under the policy.
Confirmation of Payee expansion
In October 2024, we also concluded the successful expansion of our award-winning account name-checking service, Confirmation of Payee (CoP), to provide further protection for end users. An important tool in the fight against fraud, the service helps to reduce misdirected payments, providing greater assurance that payments are being sent, and collected from, the intended account holder for UK domestic payments.
Following two years of extensive work and collaboration with industry to support PSPs in fulfilling their legal obligation to implement the service by 31 October 2024, as per the PSR’s SD17, 99% of all Faster Payments in the UK are now covered by CoP.
The importance of data sharing
During the session, the importance of tackling fraud from the outset, rather than in retrospect, was highlighted. To this end, data sharing was mentioned as a key element to building a resilient ecosystem and effectively fighting fraud. With further reference to our RCMS, Dave underlined the value of a central hub of data, collated from across the ecosystem, that can be exploited to help identify patterns and trends to help inform effective fraud prevention solutions.
This data can further pinpoint origins of fraud – social media, online platforms, telecommunications scams – and subsequently serve to encourage these sectors to recognise their role, creating a holistic approach to tackling fraud in the UK.
AI and fraud prevention
Advanced AI technology has unlocked the potential for the development of innovative solutions that can increasingly detect and prevent fraud to further benefit end users. In 2023, we conducted a fraud detection pilot in collaboration with the UK payments industry and three leading fraud prevention solution providers, Visa, Synectics Solutions and Featurespace, trialling a new overlay service which will allow all UK banks and building societies to analyse money flows and use predictive intelligence to proactively detect fraud and help prevent crime before it occurs, safely and securely.
The results of the pilot exceeded expectations, revealing an average 40% uplift in fraud detection at a 5:1 false positive rate. The next phase of development will involve close collaboration with representatives from across the payments industry to develop and define a proposition for the service.
Conclusion
Tackling the increasing threat of fraud, and implementing effective consumer protections, is an industry-wide responsibility that requires collective effort, collaboration, and alignment. At Pay.UK we are committed to working with banks, regulators, the Government, fintechs, and other key players from across the industry to fight fraud with impact. We must work together, sharing data, intelligence, and forging strong partnerships to stay ahead of emerging trends to continue improving outcomes for end users and mitigating damage caused by financial crime.
Watch the full broadcast here: The Payment Systems Broadcast Session #20 – FNA
