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Amidst a heightened regulatory spotlight on fraud, PayUK’s prevention and detection pilot has been making strong progress according to the results from its first year of operations.

The pilot was launched in June 2023 and took place over three months, conducted with PayUK partners Visa, Synectics Solutions and Featurespace. The initiative trailed an overlay service allowing banks to analyse money flows and use predictive intelligence.

PayUK hopes that the overlay service will enable participating British banks to proactively detect fraud and help prevent crime before it occurs. PayUK’s results suggest that the intiave has some potential.

One year on from launch, results from the three-month pilot show an average uplift in fraud detection of 40%, with a false positive rate of just 5:1. PayUK states that this would amount to detecting over £112m worth of fraud within one year.

Kate Frankish, Chief Business Development Officer and Anti-Fraud Lead at Pay.UK, said: “The positive results from this pilot demonstrate the importance of innovation and cross-industry collaboration in developing effective solutions to stay ahead of fraudsters and protect people in the ever-changing payments landscape. 

“In 2023, the UK saw 232,429 people falling victim to fraud. To reduce the scale of the crime that is happening we need a unified approach, and this future service will be a major step forward.”

The three firms participating in the pilot received historic transactional data from Faster Payments – one of the UK payments infrastructures PayUK supervises. This data in turn came from Faster Payments’ participating banks and payments service providers (PSPs).

PayUK is confident that the piloted tool can be adopted by all UK PSPs as a whole market solution to prevent both consumers and businesses from becoming victims of fraud regardless of which bank they use.

Mandy Lamb, Managing Director Visa UK and Ireland, commented: “The UK has one of the most developed payment systems in the world, but also sees some of the highest levels of account-to-account fraud. 

“Once fraud happens, the money is in the hands of the criminals so fraud prevention must be our collective goal, in the financial services industry and beyond.

“Visa has already reduced card payment fraud to historic lows, which we are very proud of. We are now bringing our AI capabilities to fight fraud and scams on account-to-account payments before they happen. We are really excited about working with our partners on this – keeping people and businesses safe from scammers is the biggest priority for Visa.”

Publication of the results comes five months ahead of the introduction of new rules around fraud reimbursement by the Payments Systems Regulator (PSR). From 7 October firms will be required to reimburse victims of fraud in sums of up to £415,000, split 50/50 between the paying and receiving bank.

These new rules have not been warmly welcomed by the UK payments sector, however, with both companies and The Payments Association (TPA) stating that the reimbursement requirement could become a huge burden for the British payments industry.