Why APP fraud is the greatest threat to fintechs today

 

 

Authorized Push Payment (APP) fraud (also known as "real-time payment scams" in the US) now accounts for 75% of digital banking fraud value globally. Fintechs are especially at risk, often blamed for facilitating it via rapid onboarding. 

Fueled by instant payments and reliant on sophisticated money mule networks (often using synthetic identities), APP fraud triggers significant financial losses, reputational damage, and mounting regulatory pressure like mandatory reimbursement schemes. 

This white paper dissects the anatomy of APP fraud, challenges the misperceptions surrounding fintech vulnerability, and argues that digital-native firms are uniquely positioned to lead the fight with innovative, layered technological defenses.

Key Topics Covered:

1. Defining APP fraud: Understanding the mechanics, scale (75% of global digital banking fraud value), financial impact (e.g., US losses doubling to $3B+ by 2026), and regulatory landscape (UK, US, EU).
2. The role of money mules: Analyzing how APP fraud relies on networks of money mules, particularly low-cost, low-risk synthetic identities created to exploit digital onboarding processes.
3. Drivers & fintech exposure: Examining why fintechs are often targeted and scapegoated (digital convenience, growth focus, regulatory scrutiny) and comparing their actual risk profile to traditional banks.
4. Why fintechs must lead the fight: Arguing that fintechs' digital-native capabilities make them best suited to deploy sophisticated, layered AI-driven defenses (pre-onboarding, document forensics, transaction analysis) without compromising user experience.