In response to the UK government’s strategy to combat authorised push payment (APP) fraud the country’s payment sector is pushing back against proposed reimbursement rules. 

According to Bloomberg News, dozens of members of the Payments Association wrote to the British economic secretary to the Treasury, Bim Afolami, pushing back against the rules.

The Payment Systems Regulator (PSR) intends to enforce a maximum reimbursement level of £415,000 starting in October, a move aimed at curbing the rising tide of fraudulent transactions.

Dozens of members of the Payments Association highlighted that the £415,000 cap is “simply not proportionate” and could disproportionately affect smaller FinTech companies. 

“We don’t want victims to fall for fraud, but the measures put in place have gone out of control,” said Riccardo Tordera-Ricchi, head of policy and government relations at the Payments Association.

“We can’t continue to say we’re a global centre for FinTech if we are dropping the FinTech centre.”

Instead, they advocate for a cap of £30,000, aligning more closely with the average losses incurred by victims of APP fraud.

APP fraud, a form of financial scam in which victims unknowingly transfer funds to criminals, has surged in recent years, amounting to nearly £500 million in losses last year alone. Victims, often left empty-handed as the transfers are irrevocable once authorised, have been pressing for quicker reimbursement and stronger protections.

However, the PSR maintains that its approach strikes a balance between preventing fraud and safeguarding victims. 

As the debate continues, the outcome will shape the landscape of financial regulation and innovation in the UK, with stakeholders seeking a solution that effectively combats fraud without impeding industry growth.