UK Fraud Rules Are Forcing Payment Firms to Take a Bigger Hit

For UK fintechs and other payment firms, the days of treating authorised payment fraud as someone else’s problem are largely over.

Since 7 October 2024, the Payment Systems Regulator has required firms covered by its rules to reimburse victims of Authorised Push Payment fraud in most cases. APP fraud is particularly awkward because the customer usually makes the payment themselves. They have been tricked into doing it, often through impersonation, romance scams or other forms of social engineering, but technically the payment was authorised by the customer.

That distinction used to leave victims carrying much of the pain. The new regime changes the calculation. The payment firm sending the money and the firm receiving it share the cost of reimbursement, giving both sides a financial reason to spot suspicious activity before the money disappears. The PSR originally set the split at 50:50 between the sending and receiving firms.

There is real money behind the change. Payment firms reimbursed £243 million to fraud victims by the end of 2025, according to the PSR. The regulator has also reported a fall in APP fraud covered by the scheme, although it is too early to pretend that reimbursement alone has solved the wider fraud problem.

For fintechs, that matters. Fraud prevention is no longer just a compliance exercise or a customer service headache. Poor controls can now translate directly into losses.

The UK is also still adjusting the system. The FCA has issued guidance on how payment firms should take a risk based approach to suspicious payments, while the PSR continues to publish performance data and refine the reimbursement framework.

The bigger question is whether making firms pay will actually make them better at stopping scams. So far, the evidence points in the right direction. But fraudsters have a habit of moving faster than regulation.

Fintech, Financial Regulation, Payments, Banking, Fraud and Cybercrime, Consumer Protection, UK Financial Services