1. Everything old is new again
Jonathan Williams Principal Consultant

2. The world of payments and fraud is changing …
New technology
New providers
Customer preferences
Increasing threats
Regulation and Legislation

3. Contactless fraud loss rates in the UK are not increasing
Loss £m
Spend £b
Rate
2014
0.15
2.32
0.0066%
2015
2.8
7.75
0.0361%
2016
6.9
25.2
0.0274%
2017 14
52.4
0.0267%

4. “Never has there been so much change in payments”
Payments Industry
Legislation
Payment Services Directive 2
Strong Customer Authentication
Open Banking
Regulation
PSR: Payment Strategy Forum
New Payments Architecture
Request to Pay
CMA Remedy

5. Old techniques are coming back, or never went away
Payment fraud
Invoice/supplier fraud
CEO/Director fraud
account takeover
Direct Debit fraud
misuse of facility
subscription
double indemnity
Identity fraud
Authorised Push Payment fraud
Account takeover
Collections fraud
account takeover
double indemnity
Identity fraud

6. Payment fraud is all about hacking, right?

7. Authorised push payment fraud
Unauthorised push payment fraud is what?
Authorised by the a valid customer
PSPs are acting on their customer’s instructions
Consumers and businesses cannot confirm whom they are paying
Faster Payments facilitates mule accounts.
Change of account details
Condé Nast lost $8million to one scammer related to one e- mail in November 2010
“UK Councils lose £7m” 2011
“Friday fraud” – solicitors
CEO/Director fraud
Invoice fraud
Builders
Private schools …

8. The end to end fraud supply chain
Customer IP
Application fraud
Account takeover fraud
Transaction fraud IP IP IP
Business IP
Money mule network
Suppliers
Consumer

9. … but what about direct debit ?

10. Securing bank account payments
DebitShield help banks and businesses secure consumer and business bank accounts from fraud and financial crime by hiding and protecting payment data

11. … and identity?

12. Payments Strategy Forum has made some progress
Progress to date
Strategy Working Groups Oct 2016
Report Jul 2016
End of consultation Nov 2016
Design & Implementation Working Groups Jan 2017
Payments System Consultation Report Jul 2017
End of Consultation Sep 2017

13. CMA Open Banking and PSD2

14. Regulation vs Legislation: CMA Remedy vs Open Banking
London
Competition and Markets Authority Remedy
Consumer/SME current accounts at 9 (big) banks
Open Banking Limited
Regulatory requirement
Single API
Customer checks TPP in FCA list
Shared credentials
Brussels
European Commission
Payment accounts at all EU banks and payment institutions
Multiple groups (e.g. Berlin Group)
National law (EU Directive)
Multiple APIs
Bank checks TPP certificate
Unshared credentials?
©Mk2Consulting 2017

15. The way we pay is changing … and impacts financial crime prevention and detection
The weaknesses which always existed, still exist
More authentication: identity is a weak link
Instant Payments: chasing the money is hard
Open Banking: new providers with little experience
Data compromises undermine data-related validation
New architecture: new systems, more data, decentralised

16. Giving our clients the best advice and insight

17. About Mk2 Consulting Mk2 Consulting can help you plan and deliver
Identity Management
Fraud Prevention
Payments
Current key topics include:
PSD2, GDPR, 4MLD, eIDAS
We work with industry bodies
Payment Strategy Forum
Euro Banking Association
Vendorcom
We’re available for:
Education and training
Auditing and assessments
Strategy and product review
Article and copy writing
Speaking and moderating
and specific project work
Mk2 Consulting is affiliated with:
Association of Risk and Fraud Advisors (
MLROs.com

18. What is a payment?
“the transfer of money from one individual or business to another” Bank of England, 2012
“the action or process of paying someone or something or of being paid” Oxford Dictionaries
“something given as a reward or in recompense for something done” Oxford Dictionaries
“compensation, discharge or performance of an obligation, or reimbursement, by giving over something that is of satisfactory value to its recipient, such as money” BusinessDictionary.com
“the partial or complete discharge of an obligation by its settlement in the form of the transfer of funds, assets, or services equal to the monetary value of part or all of the debtor's obligation” investorwords.com

19. What is a payment? Purpose Transfer of Value Payment
Cost of payments is about processing the associated data:
Cashing up at the end of the day
Reconciling cheque payments
Applying payments in suspense accounts
Approving electronic credits and card payments