Banks, Merchants Highlight Collaboration, Data sharing to Fight Fraud

Fraud levels remain high in Europe, and payment service providers, banks, merchants and card networks are deploying a range of technologies and strategies to help prevent illicit transactions. We see increasing calls from within the financial services community and central banks in Europe for greater collaboration and sharing of intelligence between different actors in the payments value chain for the purposes of fraud prevention. However, regulatory concerns about the sharing of data and reservations from financial institutions themselves about privacy and competition remain roadblocks.

The need for data sharing and collaboration to fight fraud is a recurring theme, but the financial services industry is governed by strict rules about sharing customer data — for example, General Data Protection Regulation (GDPR) in the EU mandates that customer data cannot be shared without consent and without a clear reason. By contrast, fraud gangs are free of regulatory burdens and can share information on targets and strategies with one another. This creates a unique challenge for the payments and banking industries.

Private sector platforms like Salv and Vyntra take a consortium approach to fraud fighting and operate at a regional or national level. We also see the dominant international card networks functioning as a "connective tissue" for data and intelligence sharing, with different actors in the payments value chain to help fight fraud. Card networks have vast amounts of transaction data at their disposal that can help them identify threats and create risk scores, but our research suggests that merchants are interested in sharing data and transaction information beyond what is usually required with card networks for the purposes of fraud fighting.

Context

Fraud remains endemic in the payments ecosystem. Whether this is authorized push payment (APP) fraud (where an individual is tricked into sending money to a fraudster), AI-driven attacks or policy abuse (in which consumers abuse returns or promotions policies from retailers), the impacts on banks, fintechs and merchants are far-reaching.

Merchants across a range of industry verticals continue to experience high levels of fraud. More than half (57.9%) of merchants in a 2024 survey conducted by 451 Research and commissioned by Discover Global Network said that they had seen an increase in fraudulent online transactions targeting their business compared with the previous year. When asked about the impact of fraud on their organization, losses were cited by 41.9% of merchants in the study as a "significant concern," while customer experience impact was cited by 39.4%.

Banks and payment service providers (PSPs) are especially concerned with APP fraud. There is an intense focus in the UK, where APP fraud losses stood at £450 million in 2024 (albeit at a 2% decrease from the previous year). The financial consequences of APP fraud for banks are stark — financial institutions in the UK must compensate APP scam victims for losses of up to £85,000, which is usually split between sending and receiving banks. While fines in this range are something that large banks can absorb up to a point, they have the potential to be financially devastating for smaller, newer banks.

The threat of APP fraud is also high in the rest of Europe, with the European Banking Authority reporting that fraud involving "manipulation of payer" accounted for 57% of fraudulent credit transfers by value in the first half of 2023 (latest data available). In Ireland, this typology of fraud has increased markedly in the past few years — so-called "payer manipulation fraud" rose from 27% of fraudulent credit transfers in the first half of 2022 to 42% by the end of 2023, according to a January 2025 paper from the Bank of Ireland.

In the face of this elevated threat from APP fraud, banks and PSPs are focusing more heavily on identifying the receiving accounts of fraudulent transactions and blocking transactions before any money is moved. We see this as one of the main reasons that intelligence sharing has become such an area of focus over the past 24 months.

There are several national- and government-backed intelligence-sharing initiatives either in existence or in the pipeline. In the UK, nonprofit membership organization Cifas, founded in 1988, works with a broad range of high street banks, telcos, insurance companies and others to share data and intelligence on fraud and financial crime.

In Ireland, the government committed to establishing a shared fraud database in late 2024. This would allow banks to securely share information on fraud with one another. It has been under discussion for several years but has yet to come to fruition.

Consortium approaches gain popularity among banks

Consortia can be a challenging proposition in fraud fighting, as they need to have considerable scale and coverage to be useful. However, we see a number of initiatives gaining traction that use a consortium analytics approach, providing a mechanism for banks to share threat intelligence.

Swiss Vyntra provides a service called Community Scoring and Intelligence, which enables financial institutions to combat fraud, scams and money mules by sharing insight and intelligence in a secure and compliant manner.

Privacy conc    

Gain access to our full news & research coverage and the industry-specific data that informs our insights

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.