Payments Association Urges Treasury to Lower Mandatory APP Fraud Reimbursement to £30,000

London, UK – 11 July 2024: The Payments Association, which celebrates innovation and collaboration across the industry, has today shared a letter to the UK’s new Economic Secretary to the Treasury and City Minister, Tulip Siddiq. The letter communicates the association’s non-bank members’ concerns that the Payment Systems Regulator’s (PSR) policy rules will undermine competition, stifle innovation, reduce investment, and force smaller players to a disorderly exit from the UK. It could also induce greater levels of de-banking, predominately among vulnerable and underbanked consumers.

At the heart of these concerns is the need for a sensible and phased approach to implementation, starting with reducing the per-claim upper liability threshold to a level that is proportionate and much closer to average losses. The Payments Association has again called for this threshold to be £30,000 rather than £415,000, as well as introducing some incentives for consumers to exercise caution. This is vital to ensure smaller payment firms and fintechs avoid a disorderly exit from the market.
The association also calls for adequate and timely reviews (every six months) of the consequences that applying the reimbursement scheme has on economic growth, competition, and innovation, as well as fraud.

“We appreciate Labour’s strong words on the importance of tackling fraud, but these must be mirrored by actions. Fraud is an issue that impacts every department of state, but there is no obvious departmental lead. It is everybody’s problem and nobody’s priority,” said Tony Craddock, Director General of The Payments Association. “Hence, we would welcome the appointment of a dedicated Minister to coordinate cross-departmental actions. Anti-fraud measures must be tackled in the round, with all parties bearing some responsibility: government, law enforcement, payments providers, retail, the technology sector and consumers.”

“Fintech is the future of financial services and we are ready to play our part to contribute to the growth agenda,” said Riccardo Tordera, Director of Policy of The Payments Association, “But we need to see the regulatory change we have been requesting for months. Good regulation allows responsible risk-taking which, in turn, drives good behaviors. I remain convinced that this is the only way to deliver sustainable growth.

“The expectation for the new government to show strong leadership is higher than ever. It’s time to deliver growth, and not just talk about it.”

The letter also highlights that given most payment fraud originates on social media, the ‘big tech’ sector in particular should be mandated to act. The Payments Association calls on the Government to look at establishing a ‘Tech Levy’ to pay for the impact that is caused by social media’s facilitation of payment fraud based on the ‘polluter pays’ principle. With this, Craddock adds: “We welcome the news reported on Friday 28th June that ‘Labour has drafted plans to make tech companies liable to reimburse victims of online fraud, in a departure from controversial rules’.”

The Payments Association, alongside the whole industry, is hopeful that the Economic Secretary to the Treasury will prioritize payments as one of the key enablers of growth and capitalize on the tremendous opportunity to achieve greater growth under new parliamentary leadership by making some necessary changes to the current regulatory environment which underpins how people pay and get paid.

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