UK Extends Payment Processing Times Where Authorised Push Payment Fraud Is Suspected - Updated

The UK's second and far more significant recent departure from the EU directive on payment services (PSD2) involves extending the time limit on processing a payment order where it's been authorised by the payer but their payment service provider (PSP) reasonably suspects that it's been initiated after fraud or dishonesty by someone else (which could include the actual payee, of course), known as 'authorised push payment (APP) fraud'. The draft regulations are available here. If you need any help with implementing or evaluating the impact of the new processes, including updating service terms and conditions, please let me know.

The PSP must form its suspicion and explain to the payer the reasons for the delay and anything required of the payer to help the PSP to decide whether to execute the payment (if lawful to do so, and not 'tipping-off' under money laundering regulation) by the end of the next business day after receiving the payment order (the usual time limit for processing). 

The PSP then has up to 3 more business days to investigate before processing (or not). 

Regardless of whether the payment order is executed, the PSP is liable to the payment service user, for any charges for which the user is responsible and any interest which the user must pay, as a consequence of a delay to the execution of a payment order in reliance on this new right.

This new right is limited to authorised, UK-only, GBP transactions (but not those initiated through a payee, like a direct debit). 

The related policy note explains that comments are due in to the Treasury by 12 April. Tthe goal is to bring these changes in to support the Payment Systems Regulator's rules on reimbursements for APP fraud from October. The regulatory amendments have since been made and will take effect on 30 October 2024.

This post is for general information purposes and is not legal advice. If you need any help with implementing or evaluating the impact of the new processes, including updating service terms and conditions, please let me know.