The Payments Association closed out 2024 in London with its Financial Crime 360 – Account Push Payment ‘APP’ fraud event.  The 20+ exhibitors had various offerings and approaches that all combined to challenge those small minority of individuals who make a career out of creating misery for others. 

The solutions included better enhanced Know Your Customer (KYC), Anti-Money Laundering (AML) and Data Management: often with claims of proprietary Artificial Intelligence (AI) providing a competitive edge.   

Fraud arises due to weaknesses in individual systems and assessments of risk. The combined efforts of these vendors play an important role in maintaining confidence in UK payments-which underpins almost everything we do. Fraud has increased with online and peer-to-peer payments, but no one suggests a reversion to cheques. As the sector evolves, we must continually educate and design solutions and systems to address legacy failings and fraud vulnerabilities.   

The following were event themes: 

• If AI is a solution, then data availability and sharing will be fundamental.  
• Large data models need large data. Vendors that accumulate and share data will challenge data governance and require stronger regulatory oversight.   
• Challenges increase with cross-border payments, especially in Frontier and Emerging markets; where high levels of confidence and equivalence in counterparty institutions, local regulatory regimes, systems and processes are needed. 
• Perpetrators of fraud go beyond the opportunistic and may be state-sponsored actors that want to fund illicit activities, or worse, disrupt markets, governments or countries.  
• The Financial Services sector is highly regulated. The success of the sector rests in an effective authority that protects participants and instils high levels of confidence at the right price.  
• When individual participants lack the required standards; regulators must act with material consequences.  
• New competitors introduce new risks. The UK Payment Systems Regulator (PSR) need to balance competition and safety. 

The PSR and the Financial Conduct Authority (FCA) do a great job of maintaining and promoting a safe payments environment. Authorities know that there can always be improvement, but it always looks easier from the outside.  

The FCA introduced new Consumer Duty Regulations that hold firms and board-level individuals responsible for customer ‘outcomes’. From mid-2024, senior executives became personally accountable. Whether this can deliver strong outcomes is uncertain, as boards may dismiss this due to a lack of understanding or blatant disregard. They can interpret the issue to be one of compliance rather than to set objectives to improve the industry. 

An effective anti-fraud and customer strategy must first make sure that the challenge is understood. Fraud occurs across most activities, but attacks start with simple processes.

UK Finance reported that APP fraud in the first half of 2024 was down 11% at £214m, and 16% fewer cases. This is a very commendable result.   

However, total annualised losses amounted to £3bn; or 1.5% of circa £200bn profits. Around £2.3bn arose from online and remote purchases. 

With the majority in merchant payments, Monica Eaton at Chargebacks 911 called for this to attract more focus. She suggested that friendly fraud made up 70% of merchant fraud. We see the effects on individuals but rarely consider the impact on merchants, where fraud directly impacts profits and cashflow. Merchants are not all large brands that can absorb the losses. Merchants can’t make up for these losses.  

When merchants challenge acquirers and issuers they risk reputational damage and higher fees, even when claimed refunds are not legitimate. Eaton believes more claims should be tested and challenged but without the merchant’s negative impact. 

Does the current economic incentive for Acquirers, Issuers and Networks need to be reviewed? Why would they actively change anything when profits from continued customer spending offset fraud? Merchants act as the first ‘stop-loss’ underwriter and result in Merchant losses and/or higher prices whilst the payment institutions gain. 

This comes down to risk transfer pricing, and in a free-market economy, this should produce better and more efficient outcomes for all market participants. But is it working? 

*** 

Join Financial Crime 360, the UK’s leading event dedicated to financial crime, this event is happening again on 3 November 2025 at the Old Billingsgate, London. Visit the event’s official website for more information. 

*** 

 Author: Graeme Ellisson, Associate, United Kingdom, Payments Consulting Network 

Has specialist knowledge and experience around regulation, risk management, operating models and capital. Chair of the ICAEW’s committee on the BofE’s digital pound.  Advises and supports a number of FinTechs and Investment firms. 

***

Are you interested in reading articles on a particular payments topic, company, payments industry executive or author? Click the search icon, it’s that magnifying glass on the top right-hand side of the website and type in the keywords that interest you. You will then be presented with a list of any articles that match your search criteria.