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UK banks propose transaction fee to create reimbursement pot for fraud victims

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UK banks propose transaction fee to create reimbursement pot for fraud victims

U.K. banks have proposed charging a fee of 2.9 pence on specific type of transactions to create a reimbursement pool for fraud victims, the Financial Times reported Aug. 28.

The levy, which would apply to transactions of more than £30 made using the Faster Payments Scheme, is expected to be launched as early as January 2020. The collections would go into a centralized pot and be used for compensation when neither the service provider nor the company can be blamed and when both parties had adopted all practices to prevent fraud, the FT said.

It is yet to be decided whether banks or customers will bear the charge, according to the report.

Trade association UK Finance revealed that customers in Britain lost £354 million in push payment scams in 2018, with Pay.UK showing that more than 2 billion faster payments were made during the year, the FT noted. Without considering the £30 minimum limit, the levy from the 2 billion transactions would have generated £58 million in funding for reimbursement purposes.

A decision on the consultation is expected by the end of November, the FT added.