Published:
Mar 18, 2024
Author:
Sarah Parsons Wolter
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In a twist reminiscent of downshifting from the hyperdrive speeds of the Millennium Falcon to the leisurely pace of a carrier pigeon, the U.K. is setting the payments world abuzz with its latest strategy to combat fraud. The proposed legislative change would allow banks and payment service providers to place a four-day hold on peer-to-peer (P2P) payments that raise red flags, giving them ample time for thorough security reviews. This news is remarkably ironic as the U.K. was the birthplace of faster payments in 2008 and it stands in stark contrast to the current global trend where P2P transactions are processed at the speed of light, with a mandatory clearance by the next business day.
However, the initiative is part of the U.K.'s plan to curtail the surge of instant-payment scams that are becoming increasingly sophisticated. In the first half of 2023 alone, the U.K. recorded a staggering 116,324 cases of Authorized Push Payment (APP) scams exploiting the faster payment service. These scams aren't unique to the U.K.; they are a global menace, with similar tactics appearing here in the U.S., where victims are prompted to make irreversible bank account funds transfers to fraudsters via legitimate-looking emails, texts and phone calls.
With £485m lost to APP fraud in the U.K. in 2022, the urgency is palpable, yet this proposed solution has stirred skepticism among observers. Is this a necessary pivot in the ever-evolving battle against cross-border financial crime, or should bank payments be slightly faster than a carrier pigeon or the DMV?
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