The Cost Implication of PSR's Reimbursement Requirements

The Payment System Regulator's (PSR) new reimbursement requirement will apply to all banks and payment companies that use the Faster Payments System, whether as sending or receiving payment organisations. 

As per the new rules, which will come into force in 2024, firms will have to:

  • Reimburse all in-scope customers who fall victim to APP fraud.
  • Share the cost of reimbursing victims 50:50 between sending and receiving payment firms.
  • Provide additional protections for vulnerable customers.
  • Provide additional protections for vulnerable customers.


The key focus of these new requirements from PSR is to increase protections within Faster Payments, as 97% of Authorised Push Payment (APP) fraud occurs in the Faster Payments System.

The new reimbursement requirement will give banks and payment companies a strong reason to innovate and develop new tools for effective, data-driven interventions to change customer behaviour, for example, adopting a risk-based approach to payments.

Firms can then make better decisions on when to intervene, hold or stop a payment to protect themselves and their customers from payment fraud.

How will the increased reimbursement rules impact the industry?

APP fraud cost UK customers and banks £485 million in 2022, with banks refunding £285 million (59%) to their customers under a voluntary industry code (and customers, therefore, losing £200 million).

Cost to the industry if PSR's new regulations were applied in 2022

  Customer cost Industry cost Sending bank cost Receiving bank cost
Actual costs £200m (41%) £285m £285m (59%) £0
Costs with new rules £9.7m (2%) £475m (66%) 238m (49%) £238m (49%)

If the rules were applied to 2022 APP fraud, costs to the industry would be 66% higher (£475 million vs. £285 million), mostly borne by receiving banks, who would pay a new £238 million cost.

The rising cost of APP fraud is being highlighted as a critical risk to bank balance sheets. Adopting better digital identity verification tools will help mitigate this business risk.

Digital identity verification – supporting the financial services sector in the fight against fraud

Click here to download the full report as a PDF.

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