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U.K. legislation says faster isn't always better

Mar 12, 2024
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Illustration: Tiffany Herring/Axios

The U.K. government has published draft legislation that would allow banks to spend an additional 72 hours investigating a transaction if they have reason to suspect fraud, City Minister Afolami said today.

Why it matters: It reflects the rising debate about how to combat fraud in the age of instant payments — and whether a delay will be feature rather than a flaw, at least in some cases.

Context: U.K. banks are currently required to process payments by the end of the following business day.

The big picture: The U.K. has been cracking down on "authorized push payment fraud" in which a customer has been tricked into agreeing to the transaction.

  • The legislation would, in theory, give banks and payments providers time to spot and reach out to customers who may have been affected.
  • Banks stateside have also been facing pressure over such schemes, with Zelle — after initially refusing to issue refunds — reimbursing some victims last year under pressure from lawmakers.
  • Zelle is expected by tomorrow to answer questions from members of the Banking, Housing, and Urban Affairs Committee on who gets reimbursements.

What we're watching: How banks plans to handle cases of false positives, as withholding legitimate funds is also a big no-no.

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