You may have seen the news announcing that, on top of existing security checks, banks are going to start verifying the name of the recipient when you transfer money into another account.
We’ve pulled together all of the key facts to help you understand what this change means in practice and whether it’s likely to affect the way that you bank and manage your money.
Introducing the Confirmation of Payee Service
Known by the less than snappy title Confirmation of Payee, this is actually a neat little tool which will allow banks to check that the name of the account holder matches the other details that you input when making an electronic payment.
You might actually be surprised to hear that this isn’t already a thing. After all, most banks already ask you for the name of the account holder as well as the account number and sort code whenever you make an online payment.
But, despite asking you to input that detail they don’t actually check it. The Confirmation of Payee Service changes that.
Once this service has been rolled out, people will be shown a warning if they try to send money to a bank account that doesn’t match the name they’ve inputted.
If you put in a name that’s almost right – for instance, because you’ve made a typo – then you’ll be shown the correct name so that you can verify it yourself.
If the details you put in are completely wrong then you’ll be encouraged to cancel the payment and contact the payee before sending any money.
In either case, you’ll still have the option of bypassing the warning and transferring the money anyway, although that would not be a recommended course of action!
What’s the point?
At the moment, some scammers are using the fact that names and account details aren’t cross checked to their advantage.
With this type of financial fraud on the rise, banks are having to take more steps to ensure the safety of their customers – especially in a climate where more and more banking is being done online.
Under the current system, it’s also possible to send money to the wrong account by accident. If you accidentally type in the wrong digits when inputting an account number or sort code, then you might send money whizzing into the wrong bank account.
While that money can often be retrieved, it’s not always easy and it certainly isn’t guaranteed. This measure should give people extra security against human error as well as malice.
Sounds good – when does it start?
This will be available from early next year, although it won’t be compulsory at first and so we don’t yet know which banks will be offering the service. To take advantage of it, both your bank and the recipient’s bank will need to have opted in.
The group that have created the tool, Pay.UK, are hoping that it will be made compulsory by July 2019, which would ensure that most people across the UK can benefit from the extra security which it affords.