Payments, protection, and the UK’s progress

Fraud remains one of the biggest challenges facing UK businesses today. The latest Office for National Statistics figures show that there were more than four million incidents of fraud in England and Wales in the year to June 2025 – a 14% increase on the previous year. Data from UK Finance is equally worrying and showed that £1.17 billion was lost to fraudsters in 2024 alone. Fraud should be treated as what it is: a systemic threat to trust in the payments system.

Trade finance providers are particularly exposed to these risks. The same UK Finance data revealed that losses to Authorised Push Payment (APP) fraud totalled £450 million in 2024. In some respects, firms operating in this space may face a tougher environment than traditional banks, given that mandatory UK reimbursement rules do not apply to them in the same way they do to payment service providers (PSPs). For trade finance, where payments are often time critical and cross-border, added checks and delays can have real commercial consequences, from late supplier settlement to disrupted supply chains.

Protecting consumers must remain the priority

The consumer is, rightly, the most important victim in all of this. Fraud can be devastating to personal finances, and the erosion of trust in digital financial services inevitably leaves consumers and business owners worse off by undermining confidence in engaging with new tools. Protecting customers must therefore always remain the central priority for regulators and industry alike.

As a result, the Financial Conduct Authority (FCA) and related regulators have raised expectations for payments firms.  In July 2025, the FCA fined Monzo £21 million for what it called inadequate anti-financial crime systems and controls, showing the regulator is willing to show its teeth when firms fall short.

Industry first 

But, while gloomy figures on fraud losses inevitably gain the most attention, there is a risk that concerted efforts by businesses are going under the radar. The same UK Finance data cited earlier revealed that £1.45 billion of unauthorised fraud was prevented by the industry in 2024: that’s equivalent to 67p in every £1 attempted. Payments firms like Cardaq are investing in detection and monitoring capabilities to help identify suspicious patterns earlier and stop losses before they occur.

The tightrope between regulation and restriction

There is always a risk that excessive regulation also has unintended consequences. Striking the right balance between reducing risk and preserving the innovation of payment firms in such a cutting-edge sector is vital. 

For example, since 2019, UK PSPs have increasingly borne liability for APP fraud, with mandatory reimbursement introduced from 2024. Firms have responded by adding friction, with more screening protocols, extra verification requirements and certain limits on individual accounts. That can mean more false positives, more manual reviews and longer onboarding, all of which are felt most sharply by smaller businesses that rely on speed and certainty. The result is a payments ecosystem that is ultimately slower.

Regulation is one of the UK’s biggest strengths. When designed and implemented well, it allows businesses to operate transparently, responsibly and at scale. This framework has been vital in establishing the UK as a global leader in financial services and fintech.

However, the focus of regulation must be on reducing risk. When it instead adds unnecessary layers of complexity, innovation suffers. Resources are drawn away from creative, inventive efforts and towards defensive, reactionary compliance. It is vital, therefore, that regulation remains proportionate.

The test should be a simple outcome-based maxim: does a new requirement measurably reduce fraud, or does it mainly increase process?

Why collaboration can succeed where regulation alone cannot

There is also undoubted scope for stronger industry collaboration as a powerful way to confront the risks posed by fraud. Payments firms, banks, merchants and online platforms need tighter coordination, and responsible information sharing where it is permitted to stop criminals hopping between providers and merchants when they’re exposed by one. Tackling the problem earlier in the chain, before a payment is ever made, is often where the biggest gains can be found. 

Without collaboration, firms end up operating in silos. Through stronger coordination and collective effort, both consumer protection and innovation can be enhanced.

By eroding trust, fraud threatens confidence in the UK payments industry at a crucial time when the economy is increasingly digital-first.  Regulation is necessary, but it should be designed to reduce harm without slowing legitimate trade. Get the balance right, backed by collaboration, and the UK can lead the way in protecting customers while still backing innovation in payments.