Payall: The impact of App fraud on cross-border payments

App payment (APP) fraud is a global problem, but the relationship between APP fraud and cross-border payments has not been fully explored.

To gain a deeper understanding of the current threats associated with app fraud and cross-border payments, we consulted 15 industry experts from across the payments ecosystem to understand the challenges that app fraud poses to cross-border payments and consider the opportunities that exist to address these issues now and in the near future. The survey found:

1. Criminals are exploiting vulnerabilities

Criminals exploit the speed and anonymity of cross-border payments to perpetrate APP fraud. This is facilitated by the difficulty of tracing illicit funds across jurisdictions and the complexity of international payment systems. The UK, with its faster payment systems, is a focal point for such activity.

1. Regulatory fragmentation

Current regulatory efforts, while evolving, are fragmented and lack international consistency. The UK Payment Systems Regulator (PSR) focuses on domestic transactions and reimbursements, with limited applicability to cross-border payments. This highlights the need for greater international cooperation and a comprehensive approach to combating APP fraud.

3. Social media giants must play their part

App fraud is a wider social problem that goes beyond the financial services sector. Social media platforms have a wide reach and anonymity and are often used for social engineering attacks. This requires law enforcement, technology providers and social media companies to take a comprehensive response to address fraud at the source.

4. Key challenges of cross-border app fraud

Key challenges include transaction speed, lack of global fraud prevention standards, data sharing restrictions, and the emergence of cryptocurrencies as a tool for money laundering. The speed at which fraudsters move funds, often across multiple accounts and jurisdictions, makes it difficult to respond and recover funds. The lack of consistent global standards for KYC, anti-money laundering, and fraud detection allows criminals to exploit loopholes in the system. Data privacy laws and the fragmentation of the global financial system hinder collaboration and timely data sharing. Cryptocurrencies, due to their anonymity and lack of comprehensive regulation, bring new challenges to tracking funds and combating fraud.

5. Opportunities to strengthen app fraud prevention

Opportunities to combat cross-border app fraud include leveraging technology, increasing collaboration and adopting a comprehensive “ecosystem” approach, as Australia provides an example. Artificial intelligence and machine learning can be used for real-time monitoring, faster fraud detection and enhanced security measures – if policy gaps are narrowed and relevant data is used. Greater collaboration between financial institutions, law enforcement agencies, regulators and technology providers is essential to sharing data, intelligence and best practices.

6. The Big Picture

Fighting cross-border app fraud requires global collaboration and technological innovation. A paradigm shift is needed, moving from a reactive focus on reimbursement to a proactive approach that addresses the entire fraud lifecycle. This includes building a collaborative ecosystem that goes beyond financial institutions to include law enforcement, regulators, technology providers, and social media companies. Leveraging technologies such as artificial intelligence, machine learning, and APIs will be critical for real-time monitoring, fraud detection, and data sharing. Equally important is addressing the broader societal impact of app fraud and building trust in the digital economy. A unified global approach is essential to addressing the cross-border nature of app fraud.

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