Form3 unveils new APP fraud prevention solution with Feedzai

Cloud-native account-to-account platform Form3 has launched an authorised push payment (APP) fraud prevention solution in the UK.

Powered by Feedzai, the new solution offers payment service providers inbound and outbound payment fraud intelligence in one solution, in what the two companies have called an “industry first”.

The solution has been built using “fully-supervised” machine learning, which understands the behaviour of both the payment sender and recipient to enable it to determine the risk of the payment being made in real-time.

The new ‘APP Fraud Solution’ is due to go live in April, followed by a full rollout in the UK market this Summer, ahead of the implementation of the Payment Systems Regulator’s (PSR’s) new APP fraud reimbursement rules in October 2024.

Form3 and Feedzai claimed that the solution’s model is able to detect 95% of fraud at market-standard false positive rates.

According to Mike Walters, Form3’s chief executive officer, the best way to tackle the rise of APP fraud is by using collaborative intelligence and technologies that allow the real-time identification of scams within the payment message.

“By bringing together Form3’s payment processing expertise, and Feedzai’s fraud and financial crime solutions, we can tackle APP fraud so that UK banks can make faster payments safer,” said Walters.

“Feedzai is the solution provider of choice for two of the top four financial institutions in the UK, so we are partnering with a market leader to combat APP fraud.”

In December 2023, the PSR revealed the details of its new APP fraud reimbursement requirement, which is due to come into effect on 7 October this year.

It has increased the incentives on all payment firms to do more to detect and prevent APP fraud from happening in the first place, by splitting the cost of reimbursement 50:50 between sending and receiving firms, marking the first time incentives have been put in at the receiving end.

Pedro Barata, chief product officer at Feedzai, said: “There is increasing regulation in this space, and rightly so – we’ve got to do everything in our power to protect the end consumer from APP fraud.

“With reimbursement becoming mandatory from October this year, it’s also in the interests of all banks to collectively ensure they prevent fraud and save huge payouts.”

Barata added that combining the “expertise” of Feedzai and Form3 will help to reduce the “level of vulnerability” in the payment process.

Last year, the PSR also published, for the first time, data showing the full extent of how well banks and other payment firms are tackling APP fraud and their treatment of those who fell victim to scams.