Confirmation of Payee (CoP) is an account name-checking service introduced by Pay.UK to give businesses and consumers greater assurance that they are sending payments to their intended recipient.
Currently, sort codes and account numbers are used to determine where a payment is sent, but banks are unable to check names on beneficiary accounts. Confirmation of Payee wants to change all that, adding an extra layer of security to protect banking customers further.
Why do you need to know about Confirmation of Payee?
CoP is essentially designed to combat cases of Authorised Push Payment fraud (APP), which is becoming increasingly common in the age of mobile payments. Like the case of one woman in Shrewsbury, who transferred £13,000 to a fraudster posing as the builder converting her loft at the time.
To make matters worse, the victim’s bank couldn’t refund her because the money had already been pulled from the account it had been paid in to.
Most victims of push payment fraud are consumers, but the threat exists for businesses, too. According to Finance UK; out of all reported cases of push payment fraud in 2017, around 12% of victims were businesses, who lost – on average – £24, 355 per case. That’s almost 10 x more than consumer cases, where individuals lost £2,784 on average.
How does Confirmation of Payee work?
With CoP, payment providers will check the name of the person or organisation given by the payer, against the actual name held on the account.
There are three possible outcomes:
- Yes – If the correct account name is used, the payer will receive confirmation that the details match, and can proceed with the payment.
- No, please check – If a similar name to the account holder is used, the payer will be provided with the actual name of the account holder to check. This gives payers a chance to either update the payment details or check with the recipient before proceeding.
- No, the name is wrong – If the wrong name for the account holder is entered, the payer will be told the details do not match and advised to contact the recipient.
To ensure the safe exchange of CoP requests, payment providers will use the Open Banking directory service, which benefits from a highly secure, API-driven architecture. Therefore, companies must undergo rigorous security checks and must also be regulated by the Financial Conduct Authority (FCA) or European equivalents to be accredited to use the system.
What else do you need to know?
The first version of Confirmation of Payee will be available to payment providers, banks, and other financial services from 2020.
At the moment, the service solely focuses on push payment transactions; payments that are initiated and authorised by end-users from their own accounts. So, Bacs payments, including Direct Debits, are not included for the time being.
Eventually, the service will be made available as a ‘Direct Corporate Access’ solution, where approved business payments software vendors can check details at point of entry into the payments system.
CoP will not stop fraud entirely. But it’s part of a wider range of measures being introduced by the industry to combat fraud, so the idea is that CoP will work in tandem with a range of services to make sending and receiving payments safer for everyone.