Guarding the Gates: EU Strategy for Safer Payment Market and Fraud Prevention

"Payment transactions in the EU are increasingly threatened by sophisticated fraud schemes," warns cep financial expert Anastasia Kotovskaia. A major concern is the rise of the so-called Authorised Push Payment (APP) fraud, where criminals manipulate consumers into authorising fraudulent transfers. Cyber-attacks on payment systems are also on the rise. According to cep, criminals exploit vulnerabilities in digital infrastructures to steal financial data. While new security requirements have been introduced lately, emerging threats of deepfakes and AI-driven fraud are evolving faster than regulations.

"Without a strong security foundation, digital payment transactions remain vulnerable," says Kotovskaia. Inconsistent liability regulations and regulatory ambiguities are the key issues here. Real-time payment systems are particularly vulnerable. Irreversibility and fast processing make it easier for fraudsters to withdraw funds unnoticed. Financial losses due to payment fraud in the European Economic Area already amount to more than 4 billion euros annually. "Instant payments must not turn into instant fraud," emphasises the cep researcher.

To combat payment fraud effectively, Kotovskaia recommends a comprehensive strategy on three levels: firstly, harmonisation of legislation and cross-border cooperation; secondly, technological innovations to combat fraud, for example through the use of artificial intelligence and real-time transaction monitoring; and thirdly, fraud prevention through consumer education and better supervision. Kotovskaia: "The fight against payment fraud is a race against sophisticated cybercriminals - the EU must become faster and smarter."