The Payments Systems Regulator has cut the amount banks must refund to fraud victims to £85,000 from £415,000.

The watchdog that oversees, money transfers contactless and other payments, says the new cap starts from 7 October and will cover 99% of authorised push payment fraud.

Authorised push payment crime, which the PSR often deals with, is when a consumer is tricked into sending money to a fraudster.

The regulator adds that its new restitution level brings it in line with the current Financial Services Compensation Scheme limit.

It says: “This was a carefully balanced decision – which provides significant protection to fraud victims and strikes an appropriate balance having regard to the PSR’s innovation and competition objectives and making sure that payment systems work well for everyone.”

The body adds that the Bank of England has also decided that the maximum reimbursement for its CHAPS high-value payment system will be £85,000.