Instant Payment Fraud: Consumer/Business Trends in the UK, US, and EU

In the UK, H1 2024, £570 ($720) million was stolen in payment fraud of which Authorised Push Payments) Payor to Payee bank accounts accounted for 30%. From 2020 to 2023 £1.4 ($1.8) billion has been scammed from customer bank accounts. Fraud accounts for 40% of all crime in England and Wales.

In the US, traditional payment fraud totals $4 with online fraud projected to surpass $362 billion by 2028.

n the European Economic Area (EEA) totalled €4.3 billion in 2022.

The use of faster payments in US and EU is still in its infancy both domestically and cross border. This is a multi-billion-dollar market needing solutions.  

Rising APP Fraud: A Look at the Latest Trends

In the first half of 2024, both UK consumer and business sectors experienced a decline in the number of Authorised Push Payment (APP) fraud cases, but the value per scam increased significantly.

• Business sector: The average loss per case surged by 31% to £13,800, despite an 11% drop in case volume.
• Consumer sector: The average loss per case climbed 13% to £1,350, with case volumes down 16%.

While fewer incidents are occurring, fraudsters are extracting larger sums per scam.

Scam Reimbursement Trends and Regulatory Shifts

Reimbursement for scam victims has been a key focus area, with 40% of scammed funds being returned to victims over the last 12 months, totalling £134.5 million. However, the new October 2024 reimbursement regulations are expected to significantly increase repayments to consumers and SMEs. Notably, large businesses remain outside the scope of these regulations.

Personal vs. Business APP Scams in the UK: H1 2024 vs. H1 2023

• Personal scams accounted for 82% of the £214 million scammed.
• Business scams made up the remaining 18% an increase of 10% 2023.
• The total scammed from H1 2024 from H1 2022 was down 11%.

This discrepancy highlights how fraudsters tailor their attacks, exploiting both individuals' trust and businesses' operational vulnerabilities.

Instant Payment Market: Differences in Pricing & Adoption

Consumers

• In the UK Sterling instant payments rarely carry a transaction fee for consumers.
• Banks generate revenue through account fees, which range from £0 to over £20 per month, which absorbs the payment costs.

Businesses

• Charged both monthly bank account fees and Sterling transaction fees.
• Foreign exchange (FX) fees can reach 3% for non-sterling transactions plus transaction fees often 10x the Sterling rate.

Adoption Rates

• Consumers and small businesses have widely embraced instant payments. In the UK, Faster Payments is growing at 15% annually and set to overtake BACS.
• Larger businesses are slower adopters, traditionally working with 30-to-60-day batch payment cycles. In cash-strapped situations, terms can go 120 days.
• Integrating real-time payments into corporate financial systems (Accounts Payable, Accounts Receivable) requires advanced fraud prevention mechanisms, including real-time data verification for supplier changes and requests for emergency payments.

APP Fraud Trends by Region: UK, US, and EU

United Kingdom

• SMEs lost an average of £11,000 to online fraud in 2024.
• 54% of UK SMBs experienced fraud in the past year.
• Businesses spend approximately 120 hours annually on fraud prevention and mitigation. (Source: Mollie UK)

United States

• $4 billion lost to fraud and improper payments in the 12 months ending Sept 2024.
• Online payment fraud is projected to surpass $362 billion cumulatively by 2028.
• The introduction of FedNow instant payments in mid-2024 may alter fraud dynamics. (Source: U.S. Treasury)

European Union

• Payment fraud across the European Economic Area (EEA) totalled €4.3bn in 2022, with €2.0bn reported in H1 2023.
• Strong Customer Authentication (SCA) has significantly reduced fraud rates.
• Fraud rates for non-SCA transactions are 10 times higher when payments involve non-EEA counterparts.
• Mandated instant payments arriving in October 2025 are expected to further curb fraud. (Source: European Banking Authority & European Central Bank)

Tackling APP Fraud in Business Transactions

Governments are stepping up efforts to combat online payment fraud, particularly for consumers and SMEs. However, larger corporations receive less protection, as regulators assume they can afford robust fraud prevention measures.

Corporate Treasury Associations as being proactive: 

• The European Association of Corporate Treasurers (EACT), representing 14,000 treasurers in 22 countries, is advocating for Legal Entity Identifiers (LEI) as a fraud prevention standard.
• The Global Legal Entity Identifier Foundation (GLEIF) aims to facilitate precise and secure international payments.

The Future of Instant Payments and Fraud Prevention

As scammers continue to exploit digital finance, the financial industry must stay ahead with real time fraud prevention strategies to protect both individuals and businesses in the evolving landscape of instant payments

Instant payments are now an integral part of global commerce, enabling seamless transactions across borders and of economic value to the growth of any country’s economics. The risk of fraud remains a critical concern as it is already a multi-billion concern.  

The action needed for consumers and businesses is a mix of:

• Real-time data verification
• AI-driven fraud detection
• Strong authentication measures
• Regulatory alignment across markets

Instant payments are the future and the banking and payment industry, and its participants need to be certain the latest information is available at the point of making a payment. Once an instant payment has left the bank account and its wrong the chances of recovery are low and often time consuming.