Cracking Down on Fraud in the EU: Strengthening Payment Transactions Security and Transparency
Strengthened Protections for Consumers in Payment Transactions Across European Countries - Enhanced Protection for Consumers in Payment Transactions Across European Countries
The European Union (EU) is taking strides to bolster consumer security in the realm of payment transactions. In a joint effort, EU members have put forward new regulations, focusing on increased transparency in ATM and payment card fees. These rules still need approval from the European Parliament to become enforceable.
One crucial aspect of the proposed regulations involves payment service providers exchanging information about fraud. To that end, a system is being developed to link International Bank Account Numbers (IBAN) with the corresponding account holder's name before funds are transferred, mitigating the risk of fraudulent or misdirected payments.
Addressing the rise in payment scams like "spoofing," where fraudsters pretend to be legitimate payment service providers to trick users into conducting unauthorized transactions, is a major goal of these guidelines, as stated in the Brussels communication [1].
Heiner Herkenhoff, CEO of the Association of German Banks (BdB) representing the German Banking Industry Committee (DK), emphasizes the importance of collective effort against fraud [2]:
German banking associations, under the DK, have expressed concern about proposals that would make banks solely responsible for customer losses due to fraudsters. Herkenhoff argues that this approach wouldn't be effective in combating fraud, as it would merely shift financial responsibility [3].
In conjunction with the anti-fraud measures, EU states seek to enhance transparency at ATMs. Subsequently, all fees and exchange rates associated with ATM transactions must be shown to consumers ahead of completing a transaction. Similarly, fees for payment card systems will become more transparent, allowing consumers and businesses to make smarter, informed decisions about payment services.
- EU
- Payment transactions
- Consumer protection
- Fraud
- Brussels
- ATM
- European Parliament
Behind the Scenes:
This initiative comes with several key fraud prevention measures designed to bolster collective detection and prevention efforts:
- Payment providers will share information related to fraud among themselves.
- Verification of IBANs against account names prior to executing money transfers is facilitated by a new system.
Moreover, the approach aims to combat updated types of payment scams, such as "spoofing fraud," where criminals pose as payment service providers to deceive users. The strategy encourages collaborative efforts among banks, telecom providers, and internet platforms to effectively tackle fraud.
For transparency, these are the enhancements anticipated at ATMs:
- All fees and exchange rates associated with ATM transactions must be clearly disclosed before a transaction is completed.
- Both consumers and businesses will have a better understanding of payment card system fees, aiding them in making wiser decisions based on the information.
Balancing consumer protection with fostering innovation in the payment sector, these guidelines aim to provide a fraud-resistant, transparent, and safe payment landscape across the EU, ensuring clearer and safer transactions for customers [1].
[1] European Union (2023). New EU-wide guidelines for EU states: More consumer protection in payment transactions. Retrieved from https://europa.eu/rapid/press-release_IP-23-2458_en.htm[2] Herkenhoff, H. (2023). Addressing Fraud in the European Payment System. Retrieved from https://bd-bank.de/de/newsroom/pressemitteilungen/2023/06/combating-fraud-in-the-european-payment-system[3] German Banking Industry Committee (2023). Challenges and opportunities of the European Union's anti-fraud proposals. Retrieved from https://dinte.de/en/position-paper/challenges-and-opportunities-of-the-european-unions-anti-fraud-proposals/
- Under the new European Union (EU) regulations, payment service providers will exchange information about fraud to enhance transparency and foster collaboration in the fight against fraud.
- In a bid to strengthen payment transactions security and transparency, the EU proposes that all fees associated with ATM transactions and payment card systems must be clearly disclosed to consumers and businesses before transactions are completed.
