The Payments Association has said that AI is key in combatting the biggest fraud threat for 2024 – APP scams.

A survey conducted at the organisation’s PAY360 event found that 39 per cent of payments professionals think that APP will have the most significant impact on the industry this year.

APP fraud involves a person being tricked into buying goods that don’t exist or sending a bank transfer to a fraudster posing as someone trustworthy.

The study revealed that identity and AI-enabled fraud were the next biggest threats, with 18 per cent and 23 per cent of respondents flagging these type of scams respectively.

While AI is being used by fraudsters, 57 per cent of respondents said that the next game-changer in the fraud prevention space will be AI, which is already used in anti-fraud operations.

"Around £240 million was lost to APP fraud in the first six months of 2023, and this figure is likely to increase, at least in the short term as payments companies struggle to adapt to new forms of fraud," said Tony Craddock, director general, The Payments Association. "We expect these adaptations to include enforcing pauses on payments from time to time, to validate a transaction when the payment is out of the ordinary, so consumers will no longer be able to expect faster payments to be fast.”

The Payment Association says that it has been watching the development of AI closely.

"We have known for years that machine-learning is the only thing with the sophistication and the capacity to tackle increasing volumes of fraud, but it’s not a simple case of installing an AI solution and watching it clean up fraud on your system," said Riccardo Tordera, head of policy and government relations for the Payments Association. "It needs careful monitoring and optimisation to be truly effective, and this can be enabled by working together to share best practices.”

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