Payment fraud falls by £73m following PSR reimbursement scheme

Fewer victims, more money returned and firms stepping up to tackle and prevent fraud. These are some of the findings from Frontier Economics’ independent review, which confirms that the Authorised Push Payment (APP) reimbursement policy is having a positive impact, with in-scope losses falling significantly since its introduction.

Frontier found that APP fraud losses have fallen by an estimated £73 million per year and the number of APP scams have fallen by nearly 35,000 due to the policy. Reimbursement rates for all claims have risen from 54% to 65%, and for claims in-scope of the policy, firms are now reimbursing 97%. The biggest improvements have been seen by firms that had the highest APP fraud levels before the policy came into force – a clear sign the incentives are working as intended.

Frontier estimate that, even after accounting for increased costs to PSPs, the policy is delivering a positive short term net benefit of £17m–£29m, which they consider a conservative assessment of its overall impact.

David Geale, Managing Director of the Payment Systems Regulator said ”The evidence is clear –APP reimbursement is working. Payment fraud losses are down, more victims are being reimbursed, and firms are investing in prevention.

“But we are not complacent. There is more to be done to ensure consistency in how consumers are treated, along with a step-change in the approach taken by tech firms and telcos to keep up with, if not outpace, those criminals exploiting their systems.”

There is no evidence of market exits or reckless consumer behaviour, which some had predicted would be a consequence of the policy.