Visa Inc is working with some of the biggest banks in the UK, in a bid to revamp how account-to-account payments are handled in the country, as consumers continue to lose billions to wayward transactions. 

The company is creating a new system that would offer consumers a formal process for disputing payments made via bank transfers, according to a statement on Thursday. Visa is working with lenders including Barclays plc, Lloyds Banking Group plc and HSBC Holdings plc on the push.

Long known for its credit and debit card offerings, Visa is looking to revamp so-called direct debit, an increasingly popular automated payment method that people and businesses use when making bill payments or signing up for subscriptions. Customers typically set up automated payments on set dates.

Direct debit has helped payments made by bank transfers swell in popularity in recent years, because it makes it less likely they will fall behind or get slapped with late fees. Last year, consumers paid about £3.70 trillion (US$4.90 trillion) worth of faster payments using account-to-account technology. 

But with more payments flowing through that system, billions have been lost to fraud, unauthorised automatic renewals or the lack of flexibility with bill payments, Visa said.

“One forgets that a lot of the things that we are used to doing and are happy to do today when we pay are actually not great experiences, and one of those is direct debit,” Charlotte Hogg, who leads Visa’s operations across Europe, said in an interview. “It’s actually a less-than-optimal payment experience.”

While the UK has one of the most developed payment systems on the planet, the country is also home to some of the highest levels of fraud on account-to-account payments.

Already, Visa has been working with Pay.UK, the non-profit that operates the direct-debit and faster-payment systems in the country, to prevent fraudsters from taking advantage of those systems. The UK is also planning to unveil new rules in the coming weeks that will require banks and financial-technology firms to reimburse consumers who have fallen victim to authorised-push-payment fraud.

Regulators announced on Wednesday that they are planning to lower the maximum reimbursement cap to £85,000 from £415,000 for victims of such fraud, following lobbying from the payments industry and feedback from government officials. Under the new cap, more than 99% of claims by volume would still be covered, according to a statement from the Payment Systems Regulator (PSR).

Industry groups said the PSR’s plans don’t go far enough, with Innovate Finance chief executive officer Janine Hirt calling the proposal “positive news”, but criticising it for allowing reimbursement in cases of gross negligence by a consumer. The Payments Association, which represents more than 200 firms in the industry, also said the plan had flaws, arguing a £30,000 cap would have been more appropriate.

A two-week consultation to receive additional responses from banks and payments firms about the change will run through Sept 18, the PSR said, and it will announce its final plan by the end of the month, with the new rules going into effect on Oct 7.

  - Bloomberg