This news follows a recent appeal from the UK payments group to Chancellor Rachel Reeves, urging the establishment of a ‘Tech Levy’ on social media giants to address the effects of payment fraud that arises from their platforms.
Starting from October 2024, payment service providers in the UK will be required to reimburse consumers who fall victim to Authorized Push Payment (APP) scams when using Faster Payments, with the cost shared equally between the sending and receiving PSPs.
The Payments Association has expressed concerns to the new Economic Secretary to the Treasury and City Minister regarding these Payment Systems Regulator (PSR) rules. Non-bank members warn that the rules could undermine competition, stifle innovation, limit investment, and push smaller players out of the UK market. There are worries that these changes could also lead to increased de-banking, particularly among vulnerable and underbanked consumers.
The association is advocating for a phased implementation of this reimbursement scheme, proposing that the upper liability threshold per claim be adjusted to a more manageable £30,000 from the current £415,000. They also call for semi-annual reviews to evaluate the impact of the reimbursement scheme on economic growth, competition, innovation, and fraud rates.
Riccardo Tordera, Director of Policy at The Payments Association, emphasizes, “Fintech is the future of financial services, and we are committed to contributing to the growth agenda. However, we need to see the regulatory changes we’ve been advocating for. Effective regulation facilitates responsible risk-taking, which drives positive behaviors and sustainable growth. We expect the new government to provide strong leadership and prioritize delivering growth.”
Tony Craddock, Director General of The Payments Association, adds, “While we appreciate Labour’s strong statements about the importance of combating fraud, actions must follow. Fraud is a widespread issue that affects all government departments, but it often lacks a designated lead. It needs a dedicated Minister to oversee coordinated efforts across departments. Addressing anti-fraud measures requires collaboration among the government, law enforcement, payment providers, retail, the technology sector, and consumers.”
Regarding the government’s proposal for a ‘Tech Levy,’ Craddock remarks, “We welcome the news from June 28 that Labour is considering legislation to hold tech companies accountable for reimbursing victims of online fraud, moving away from previously controversial rules.”