Some see the Covid era as being a catalyst. With people being locked down and having to shop online card payments surged. Alongside this, there has been a growing use of digital wallets and contactless payment methods. This, in turn, has led to even relatively small retailers starting to welcome these methods of payment.
This shift in behaviour has led to the Government taking a long hard look at what regulatory changes might be required in this new financial landscape. It has been given the umbrella title of the ‘National Payments Vision’, or NPV for short which was first published in November 2024.
The primary objective of the NPV has been one of consumer protection by reducing risks and ensuring compliance across the board. This has been made even more critical thanks to the emergence of many third-party suppliers within the sector. It also aims to consider changes that are being anticipated in the blockchain space.
Underpinning it all is the assertion, made by Joe Garner in his November 2023 Future of Payments Review, that “the economy cannot grow without the payments infrastructure to support it”.
One sector that has been paying particularly close attention to the regulatory changes is the online casino industry. Many operators rely on offering rapid payments to players as a strong selling point in a competitive market. To see how many of these online casinos are doing this, here are the fastest currently on offer.
To provide this, they rely on the sorts of payment companies who are being affected by the new regulatory compliance which is overseen by the Financial Conduct Authority.
Safeguarding Customer Funds
Obviously, protecting consumers’ money is the cornerstone of the new regulatory framework. So, any companies that handle payments now must provide an enhanced level of reporting, monitoring and recording. This is to offer consumer protection in case a payments company ever finds itself becoming insolvent.
As a result, comprehensive internal and external reports need to be regularly produced, as well as to have a comprehensive auditing process.
In addition, customers’ funds need to be stored in a separate safeguarding account to ensure that they are still accessible, whatever the financial situation of the payment organisation.
Delaying Payments In Suspected Cases Of Fraud
There has been a huge increase in the prevalence of so-called Authorised Push Payment fraud. This is when a consumer is tricked into making a payment by an individual pretending to be a legitimate business or other legitimate recipient.
Under the new regulations payment providers are authorised to pause a payment for as long as four working days if there is any evidence to suggest that a fraud is in the process of being committed. This gives enough time to investigate whether it is a legitimate payment and it is also a requirement that the would-be victim is kept informed about the progress of the investigation.
Fraud Reimbursement
Despite the best efforts of financial institutions and payment providers some frauds do slip through the net. If this does occur, then the new rules dictate that reimbursement should occur within five business days of the fraud being reported and investigated. Currently the cap for this is £85,000 but reimbursement won’t be made if the customer has acted fraudulently themselves, or it can be proved that their own gross negligence has led to the loss.
The Impacts On Payment Providers
It’s inevitable that the new regulations and requirements will represent additional costs that payment providers will have to meet. For example, they will necessitate a large investment in upgrading or replacing current fraud-identification systems as well as making reporting systems more robust. For the major players, these costs may be easier to absorb but it may be that smaller businesses will not be able to meet the extra expense.
However, on the plus side, this also represents a very good opportunity for those that can afford it to strengthen their position stronger by increasing customer trust. By instigating more robust safeguards, they will demonstrate a commitment to offering a safe and secure service. By trumpeting these measures in their marketing material, it will give them a distinctive advantage over their competitors.
Above all, the new regulations will serve the purpose of being a springboard for even more advances in payment methods. So before long even more accurate fraud detection systems could be on the way. Naturally, AI is set to play a critical role in this too.
So, we can look forward to an altogether safer payments environment that will also offer higher levels of efficiency than ever before.
Disclaimer: The information in this article is provided for general informational purposes only and does not constitute financial or investment advice. Investing in betting or gambling companies carries risks, and past performance is not indicative of future results. Always conduct your own research or seek independent professional advice before making any investment decisions.