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Welcome to The Payment Expert weekly podcast, brought to you by SBC Media. Each week we analyse the news driving the global payments industry forward; the innovation, the infrastructure, and everything that has to happen to make it all possible.
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these social media companies aren't going to, you know, hold their hands up and say, we're the reason this fraud happens, these scams happen because that's an admission of guilt. Hello and welcome back to the payment expert podcast, your source for the latest news insights and analysis on the payments industry. I'm Lewis Thompson, news editor at payment expert and with me today are senior journalists at payment expert, Callum Williams and Kieran O'Connor. Good to have you both back guys. Good to be back. Yep. Thanks. Thanks to this again to be a part of a podcast and now Kieran now has got the senior journalists title now. So He has. Congrats to Kieran. And because of that, we're going to pick up on one of his stories from the past week, which was a look at India and its central bank, which wants to put a one hour pause on certain digital payments in a country that's built one of the world's most advanced payment networks, instant payment networks in UPI. It's a pretty significant admission to put pauses on certain payments, but It comes as fraud cases have risen tenfold there since 2021. And you know, when an instant payment is made, obviously there's almost no window to stop that transaction going through. And obviously that comes with fraud too. If there's a fraudulent transaction there, that window of course is pretty instant. But obviously having a one hour delay would keep payments reversible, uh giving users in India time to catch. anything suspicious. So Kieran, I'll start with you as obviously it's your story. Just run us through, obviously India's built UPI on speed and scale to be quick. Talk us through the ruling quickly from India's central bank. Yeah. So the ruling is a part of a long list of sort of proposals, which was included in a paper last week from the Reserve Bank of India. The proposal in short, is a one-over lag to be applied at the payers end and this pretty much means that the payers would, that the payers bank would provisionally debit the customer's account while allowing the payer the option to cancel the transaction for any reason. So when I was sort of researching this... A common example which jumped to me was one that Monzo Bank uses, as a Monzo Bank user myself. They introduced this last year into their app and it pretty much just allows you, say you send a tenner to one of your mates and you think, oh, I maybe added a zero which I shouldn't have added in. You can cancel that transaction within a certain time. So within this time, it would be within an hour. No, this isn't just a tenner though. This is being proposed for authorized push payments, which are transactions above, I believe it's $107 if we look at the rate in dollars. And to sort of answer your question on is this sort of way uh waving the white flag to fraudsters, I think it is. I'm to be quite bold and say I think it is. I think it's sort of saying We don't have an answer to combat fraud within that short window. And I don't think any market does at the minute. What I will commend the RBI for is for sort of taking a step back and maybe putting trust and safety before their own pride. It's a pragmatic solution which does take it out of the hands uh of the fraudsters by giving the consumer uh or are the payer more control? Yeah, I mean, I suppose it comes down to, you you have these things built on speed and scale like UPI is and other markets are trying to replicate what UPI is doing because you get those instant payments. But if the infrastructure around it, particularly to do with fraud and APP fraud, if that's not up to scratch, I suppose in the same way, then you almost have to have these filters in. So the instant payments perhaps aren't as instant um as they were due to the amount of fraud. What are your thoughts on it, Cam? Yeah, it's interesting to note that there's like an hour timeframe for so-called instant payments. But I think it is a measure that is needed. I just want to touch on some of the Some of the challenges that do come with account to account instant rails like UPI, obviously they've been marvelled and rightly so. They've been highly regarded as a great consumer benefit payment method. Obviously we can see PICS in Brazil as well. That's kind of in a similar vein. But there are some sort of challenges involved with them in terms of high transaction volumes that can also lead to potentially more payment failures because it's so reliant on connectivity. They could be more prone to system downtimes and obviously not being able to sell that payment instantly. And also to the connectivity, we look at maybe some rural areas in India, maybe there is a there might be limited internet connection within those areas. And then I think also when it comes to some of the fraud, we have been seeing quite a lot of cases of fraud uh revolving around picks in Brazil. And it's also just think it's the infrastructure is still so new and still so raw almost that you do need to start to think about some of these measures like the RBI have took when it pertains to fraud and dispute payments as well, I believe. So when I think the Monzo example is something that is forward thinking, I believe. Yeah, sure. I mean, you mentioned PICS. Obviously that's pretty similar, identical. when you compare it to UPI, obviously it's Brazil's instant payment model, but they've kind of taken a different route from UPI putting this hour block in, that they've got a sort of dispute mechanism, I believe directly in-app, so users can instantly flag something and sort of block funds moving at the receiving end. uh Obviously it doesn't have that hour window, so then I suppose the counter argument to that is that only if you realize it's fraudulent and you press it. Can it be flagged quickly enough? Often, know, a fraudster will, if you send them money, they'll get it in their account and they'll withdraw it pretty quickly. Although that obviously does give the instant model, it stays true to the instant model if your picks. What do you guys think on those approaches? Who's done it better, India or Brazil? Yeah, I mean the PICS one is one that on face value does seem better, it does seem quicker. It obviously kind of almost stays true to the whole instant payment uh commitment. But I think with what India are proposing, think when it comes to an hour long window to dispute a payment that gives the customer more than enough time to actually secure the funds and that's what it's all about. It's all about if a customer has mistakenly sent funds or has actually had funds that have been fraudulently taken out of its account, that our window becomes a lot more valuable because I'm sure like local banks or commercial banks in India will then obviously notify the customer within that our window and then obviously you can go through the process of gaining those funds back. Where I think is with PICS and the Central Bank of Brazil. They have up to seven days to analyze the fraud claim. So I think I think if you obviously put it in the hands of the central bank and the regulators and the investigators, you could be waiting up to seven days to get an answer back. Whereas an hour, I mean, don't take a rocket science to figure out which one's a lot quicker. Yeah, on that, I would say for me, I would have to pick India as my, as the one that I think is best. India's approach, I would say, is more proactive. eh That sort of one hour buffer. also I think is designed specifically for these authorized push payment scams, know, where the victim is tricked into sending money themselves and that delay sort of gives them a chance to acknowledge that or realise that something is wrong and reverse it. But I think they're both very different, they both try and solve the same problem, but they're both very different. I think the reason they're very different is because the fraud profiles from both countries are also quite different. So when you look at Brazil, I think the biggest issue is around volume and sort of this opportunistic fraud. Where when you look at India, it's much more like the UK. You've got this big APP fraud issue where, you know, people are using AI to sort of pretend to be someone else or the sort of social engineering deepfakes. see it all the time. Uh, so yeah, I think they're both trying to solve the same problem. Um, but if you really dive into it, there's really different types of fraud at play. Yeah. I mean, you mentioned the UK, obviously. think the UK is a kind of, mean, there are some proposals out there and I can't remember off the top of my head, the names of them, but sort of looking at the root cause of fraud. And you mentioned APP coming from social media. networks. Do think there's maybe an overreliance on obviously payments taking the brunt of fraudulent actions when things go wrong that they're liable? Obviously India has put this hour window in place, but when it comes to social media, is there an angle where India could have gone down that route a bit more? Something that the UK is looking to do? think India should do that. Fraud originates a lot from social media. And this is where most scams start. So social media may be taking more responsibility in sort of preventing these scams at the source would help everyone. That being said, from the conversations we've seen in the UK, I don't think it's as simple as that. These social media companies aren't going to, you know, hold their hands up and say, we're the reason this fraud happens, these scams happen because that's an admission of guilt. But for the payments companies, their priority is to protect the users now. And the only way to do that, if social media companies aren't going to conversate and help with these solutions right now, is to introduce measures like we're seeing with this one-hour lag. Yeah, just to piggyback on some of what Ciaran said there, and it's kind of almost in relation, but I think that's why you're seeing a lot of hesitance within traditional. mature markets like the UK when it pertains to potentially developing an A2A instant rail is because I don't think they kind of had the answers to some of these instant dispute claims. And yeah, it might be good for countries like Brazil and India that obviously don't have the traditional mature uh infrastructure to then that can afford a rise like PICS and UPI. But I think there is still a lot of questions. mean, we only got an answer to the APP fraud uh problem. in October 2024 with the new regulations uh capped at £85,000. So I think that's also worth keeping in mind that while it does seem good in theory, the instant A to A rails, that there's a lot of other complications involved. definitely are. I even if you look at, I mean, the EU's mandating instant payments as a, as a kind of baseline as well. mean, given India's experience and looking at the process they've gone through is the fraud angle still something that European regulators need to sort of get around it and build the infrastructure around how an A2A rail looks? Or are they going to end up in a similar position to an India where they've got these instant payment methods, but they're imposing hour delays and lags on a payment actually going through because of the fraud risk? Well, to give a football reference to that, think the EU are kind of like the Michael A. Tata of payment regulation, safety first. oh Sorry Arsenal fans, but no, the EU, so the EU when it pertains to the instant payment regulations, they obviously have verification of PE, which is now mandated from, well it was mandated from October 2025. So that pretty much connects I-Bands with the PE's name and the transferring of funds. So it just reduces scams and other payment errors like payment disputes. There's also liability for misdirections if a payment service provider fails to alert a user about uh a potential dispute or payment failure, then they'll be compensated with the resulting loss. So the EU obviously have a lot of regulations and consumer protections in relation to instant payments. And it's something that now they're being mandated for all EU central banks. I think they've covered most of the basis when it pertains to widening the adoption of instant payments across Europe. Sure. Anything on that, Kieran? Yeah, I would say that the EU are definitely at risk of sort of repeating the same problems that India is facing and other markets are facing. One rule that I saw that they added into this, and correct me if I'm wrong, is that PSPs must hit like a 10 second SLA or face penalties as office penalties of up to 10 % of the turnover, but I didn't spot an equivalent penalty for weak fraud controls. I know there will be penalties on sort of AML issues and KYC issues, there's sort of this real emphasis on making these transactions as fast as possible and as convenient as possible, but there's no safety. There's no real emphasis on safety. So yeah. Okay, no real emphasis on safety. We'll follow that line and we'll see what the EU looks to do and the UK. Before we finish today, let's just touch on something you guys are doing next week, which is going out to Thailand for Money 2020 Asia. For our listeners, just give some insight into some of the conversations you're going to be having, some of the biggest takeaways you expect to take from the show. What are you looking forward to hearing from on the ground? Yeah, it's going to be really interesting to head out to Thailand next week covering Money20-20 Asia, I think. There's a whole lot of talk, particularly around QR code payments within Asia and Southeast Asia that have just exploded in usage. And I remember I went to Thailand last year just on a holiday vacation. you could tell that it was the most popular type of digital payment method, although cash is still pretty prevalent within Thailand. So no, QR code payments most definitely. I think there's a lot of talk at the moment as well around digital currencies and tokenization. I there's a few panels on the first day around some of Japan's commitments to tokenized money and moving that at scale, which is going to be really interesting keynote. There's also a lot of talk around cross-border payments and some of the challenges in regards to Asia's boundaries when it pertains to cross-border payments. I know that the digital currencies, think hopefully we can get a lot of discussions around China's CBDC program. I know the digital one is the largest CBDC project in the world and it's not even close. So yeah, I think there's a lot of forward thinking conversations to be had there. I think obviously we'll pay my thanks. Obviously me and Ciaran will keep us all up to date. Try our best anyway. Look forward to it. Ciaran, anything on your end? Yeah, so. Yeah, I guess Callum's run through some of the topics that they're putting on. One topic I'll talk about, which I don't think gets enough attention, so I'm deciding to cover it at Money2020, which is stable coins. Oh, no. Definitely not enough attention. No. But on that, yeah, I've got some conversations lined up with some pretty big companies around stable coins, but I do promise to sort of give them a bit of a different perspective and maybe look at how Asia has become this sort of leader in adoption when it comes to the consumer uh use cases for stable coins rather than just the B2B and the cross border use cases. So it'll be interesting to see what they have to say on that. Absolutely. Well, we look forward to hearing from you both next week, live from Thailand. But that's all we have time for today, unfortunately. Thanks to Callum and Kieran for joining us and we'll see them. next week. you're not already subscribed to the payment expert podcast, make sure to subscribe wherever you get your podcasts with plenty more insights and analysis coming over the weeks and months ahead. And for the latest news as it happens, head over to payment expert.com. We'll see you next time. you