The way we make payments is constantly evolving and one of the biggest changes is a significant rise in instant and A2A (account-to-account) payments. Research from Juniper suggests A2A transactions will increase from 60 billion global transactions in 2024 to 186 billion by 2029; an increase of 209%.
The real-time nature of these payments has made it easier to transfer money swiftly but it also presents a new challenge—real-time fraud, making it difficult to reverse transactions, which fraudsters have been quick to exploit.
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Authorised push payment fraud: a global issue
According to data from UK Finance, in 2022, 20% of consumers worldwide have been victims of payments fraud and 27% of those were victims of APP fraud. The latest figures in the UK show APP losses amounted to £459.7m and the total number of APP cases was up 12% to 232,429 in 2023.
To tackle this issue, the UK’s Payment System Regulator (PSR) has implemented new rules that require banks to reimburse victims of APP fraud up to £85,000. The costs will be split equally between the sending and receiving banks.
The rules also give banks the authority to delay payments for up to 72 hours if fraud is suspected and mandate that victims be reimbursed within five days.
As other nations consider similar moves, the financial ecosystems of each jurisdiction must evaluate the potential risks. What lessons can they learn from the UK’s approach, and how can they better frame their response?
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By GlobalDataPrevention is better than intervention
While the measures in the UK are aimed at enhancing consumer protection, they may fall short when it comes to reducing fraud. The rules could also inflict long-lasting damage on the banking industry as challenger banks and payment firms struggle to afford to pay such high levels of compensation.
Criminals may try to exploit the UK’s new reimbursement rules to increase their profits. Much like the exploitation of COVID-19 relief schemes, there is little stopping them from falsely claiming they’ve been scammed to receive up to £85,000 in compensation.
Tackling APP fraud: should not be left to banks alone
But it shouldn’t be left to banks alone to solve the issue. Expecting fraud screening systems to catch every case is unrealistic. While advanced technologies have improved detection rates, they remain unable to stop all fraud.
Socially engineered scams are notoriously difficult to detect, as victims believe they are making legitimate payments. Victims are often coached to deny third-party involvement, making detection nearly impossible.
The rules to delay payments up to 72 hours may seem beneficial but how will banks determine which payments are suspicious, particularly for socially engineered scams?
As things stand, banks will still struggle to distinguish legitimate transactions from fraudulent ones and could opt to delay all payments above a certain threshold. This could have significant ramifications for the economy from difficulty in paying a house deposit to raising costs and operational overheads for businesses.
What’s needed is a proactive strategy that intervenes before the payments are made. Technology can play a role, but fraud prevention must go beyond that—it requires collaboration between banks, tech platforms and regulators.
Much of this fraud begins on social media platforms like Facebook and Instagram. But what is Meta doing, where are the misinformation labels, the pop-up warnings, and the preventative measures for unverified content—such as suspicious investment advice or fake job offers?
Prevention is the only viable solution. By the time a payment is made, it’s already too late—the victim has been manipulated, and the bank is seeing only the final step of a complex scam. The real enablers of fraud must also be held accountable.
What is happening elsewhere?
We are seeing an increasing global debate on how best to implement fraud prevention measures, particularly as we see more and more high-profile cases of victims not getting their money back from their banks after being scammed.
While Singapore consulted on a split liability scheme last year, other jurisdictions such as the EU are at a very early stage in exploring how to tackle the liability question in fraud.
The UK’s new rules could then potentially set a precedent for how fraud reimbursement rules are taken forward in other countries. We are seeing the UK approach referenced in the current debates in Australia and New Zealand.
In New Zealand, the Commerce and Consumer Affairs Minister Andrew Bayly has asked banks to investigate an industry-led voluntary reimbursement scheme for victims of authorised payment scams.
Australia’s Federal Government is exploring a more holistic approach with a broader scope of their proposed reimbursement rules including penalties for social media platforms.
Under these proposals, banks and platforms could be fined up to $50m and forced to compensate victims if they fail to protect against scams. Depending on its success, this unified scam prevention approach could be an example for other countries to follow.
What is the solution?
To stop APP fraud, all players in the ecosystem—banks, social media platforms, tech companies, regulators, law enforcement, and consumers—must work together. This isn’t happening in the UK.
With 76% of fraud originating online, particularly on Meta-owned platforms like Facebook and Instagram, prevention efforts need to start where the scams do. These platforms must bear part of the responsibility whether through penalties or sharing the financial burden.
Australia’s proposed unified scam-prevention network offers a promising example of a whole-ecosystem approach. It’s not just about reacting to fraud but about preventing it through collaboration, technology, and awareness.
Fragmented efforts won’t be enough to tackle APP fraud. We need a united front, with everyone working together to shift from reactive reimbursements to proactive prevention. Only through collective action can we change the game and win the fight against fraud.
Silvija Krupena is Director of the Financial Intelligence Unit at RedCompass Labs
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