As was reported earlier, the Payment Systems Regulator (PSR) has decided to review the reimbursement cap on App fraud with the intent to set it at £85,00. This has been widely embraced by the payments sector as previously the reimbursement cap was expected to be set at £415,000. A consultation has commenced which should complete later this month.
CI has received several comments from Fintechs in the payments sector. ClearBank’s Chief Governance & Legal Officer Philip House shared his thoughts on PSR’s decision. House said they welcome PSR’s decision, noting that ClearBank has been advocating for this outcome as a pragmatic step in developing rules on App fraud.
“The proposed reduced figure of £85,000 will fully compensate consumers for 99% of claims while also providing a sensible safeguard for businesses delivering valuable payment services,” stated House. “The payments industry will continue to work tirelessly to address online fraud, making substantial investments in fraud detection people, processes and systems, which will deliver better protections for consumers.”
He clarified his thoughts, stating that more work needs to be done on addressing fraud where it is happening, IE, social media and tech companies, which should be saddled with a similar financial incentive as payments providers.
“This sector should be part of a cross-industry solution, working alongside law enforcement, per the Australian and developing EU models. The current PSR rules transfer all obligations onto the UK payment services industry, leaving social media and tech firms to operate under their own rules and without any contribution to reimbursement costs. The “polluter pays” principle seems most fair here and would ensure that such firms have the same incentives to prevent fraud. The PSR’s approach will inevitably reduce fraud but it is not a solution for preventing or addressing the organised gangs and everyday scammers on social media outlets operating at the source. Without co-operation between all stakeholders, a fully effective UK fraud management plan remains outstanding.”
The consultation is available here.