Request to Pay: how telecoms providers can better protect against fraud

Security against fraud
Request to Pay: how telecoms providers can better protect against fraud
James Bushby is the Senior Vice President of Strategic Sales and Real-time Payments at Mastercard.

In the first half of last year, more than £750 million was stolen in UK fraud cases, a 30% increase over the same period in 2020. Last summer alone, 45 million people in the UK were targeted by scam phone calls and text messages, according to telecoms regulator Ofcom.

The cost to consumers who fall victim to these scams can be devastating, and yet the effects on the organisations being impersonated can also have long-term impacts. The outcome can be a significant loss of customer trust, and for the telecoms industry – where switching has become even easier for consumers in recent years – this can mean a loss of customers.

Many businesses therefore feel they need to play a more active role in keeping their customers safe, as well as avoiding the financial cost of fraud, when they need to chase payments which customers are convinced they’ve paid.

To better understand these challenges, Mastercard spoke to hundreds of billers, including telecoms providers, and found that it now costs almost half (40%) of billers between £350 and £1,000 to solve a bill dispute. Whilst four out of five billers told us that COVID-19 had exacerbated the challenges with bill collections, this is unfortunately likely to continue with the increasing cost of living.

Indeed, when asked about the biggest changes in customer behaviour following the pandemic, 67% of utility providers said they had seen an increase in requests for bills to be paused or reduced and arrears to be reassessed. While people struggle to make ends meet and pay their bills on time, the constant threat of fraudsters phoning or texting victims and impersonating one of their utility providers is something that needs combating.

This type of scam is known as authorised push payment (APP) fraud. It occurs when a criminal sends emails, texts, or makes calls to an individual pretending to be from a service provider, such as their bank, an energy supplier or a telecoms company.

They will normally tell the consumer they have an unpaid bill and will pressure them, using threatening language or threat of legal action, to willingly transfer money out of their account to them. This type of fraud rose sharply during the pandemic, with a 71% increase during the first half of 2021, costing victims over £350 million.

The telecoms industry is playing its part in combating this type of fraud, working closely with those in the financial industry and regulators to block scam text messages and prevent criminals from spoofing the phone numbers of trusted organisations.

An initiative to block international calls which falsify a UK number is already being implemented by some providers, with one – TalkTalk – stating it saw a 65% reduction in complaints about scams since implementing the measure. However, this process will take time, with the issue remaining that, as numbers or texts are blocked, criminals can simply move onto new ones.  

The main challenge with tackling this type of fraud is that billers and customers still typically communicate with each other through channels like phone or text which anyone can use and can be easily targeted. This is why Mastercard has been working to develop a new secure messaging platform which removes this risk.

In 2020 the UK’s national retail payments operator, Pay.UK, created a new framework to enable more flexible, secure and customer-focused ways for bills to be settled between people, organisations and businesses.

Building on this framework, Mastercard’s Request to Pay service was the first of its kind in the UK to connect billers and customers directly to specifically facilitate the request for a payment and provide a secure communication channel to raise any questions or challenges the customer might have as part of the payment process.

The service can be integrated directly into an existing and trusted app, like that from a bank or utility provider, instead of requiring an external, less secure service like text or phone.

The benefits this brings are clear. Billers can make direct requests for payment without the need for the consumer to share sensitive financial information and gives them the flexibility to discuss how they will pay and how much, whether that’s fully, in part or requesting more time.

The biller can then initiate a request to pay directly from within the service, offering not only a better level of service, but greater security and reassurance to both parties over who they are speaking to, practically eliminating the risk of accidental payment misdirection and push payment fraud.

Preventing fraud is an area we know billers, including those in the telecoms industry, are focused on. Of the billers we spoke to, over a third said they were looking to expand or upgrade their investment in this area. Other areas highlighted for increased investment were data security, analytics, instant payments and error prevention – all areas which Mastercard’s Request to Pay solution can help with.

As well as billers, consumers are equally keen. The majority of those we spoke to, including gig workers and those on irregular incomes, said they would be interested in using mobile phone chat services to receive and pay bills with immediacy and security.

As mentioned, chasing and settling disputed payments can cost billers significant sums, and with a service like Request to Pay, Mastercard aims to offer greater transparency, certainty and efficiency in the billing process for all parties.

Through Request to Pay services, there is a real opportunity for telecoms providers to not only provide an enhanced billing service to their consumers, but to also protect them from those looking to deprive them of their earnings.

At Mastercard, we want to play our part in providing people with safe, secure, and convenient ways to pay. With our Request to Pay service, we can help do that, providing telecoms companies, financial organisations, and other utility providers and billers with a more effective and secure way of communicating with their customers.

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