Introduction
A catalyst of the pandemic, the payments landscape has seen significant digitisation in recent years with a push for a more efficient and seamless payment process. Although the rise of digital technologies and online banking brings convenience and efficiency, the latest technological advancements also leave businesses and consumers vulnerable to fraud.
Financial losses continue to be driven by fraudsters taking advantage of the latest online platforms and telecommunications. Figures released by UK Finance show that £580 million was lost in the first half of 2023, with the report showing that fraudsters are increasingly using impersonation tactics to deceive victims into transferring their money.
These figures and the growing number of misdirected payments highlight the importance of implementing an effective fraud mitigation strategy. Confirmation of Payee (CoP), known as Bank Account Verification (BAV) to consumers is a digital solution that helps address these concerns and is a crucial component in preventing types of Authorised Push Payment Fraud (APP Fraud) in the digital payments landscape. This comprehensive guide will cover:
· What is Confirmation of Payee?
· How does it work
· How it prevents fraud
· Its benefits for business
· The cost of APP fraud to businesses
· How to safeguard your business and prevent APP Fraud
What is Confirmation of Payee?
Confirmation of Payee is a digital name-checking service for UK-based payments designed to help business and personal customers reduce fraudulent and misdirected payments. Confirmation of Payee provides an extra verification step in the fight against app fraud by ensuring that payments are being sent, and collected from the correct account before the payment is sent.
For individuals, Confirmation of Payee serves as a bank account verification system during digital payments. Most people are familiar with Confirmation of Payee from making personal payments with their bank. It verifies the account details and provides simple warnings for suspected fraudulent activity, giving end users greater assurance and clarity when making payments.
How does Confirmation of Payee work?
Confirmation of Payee is a simple, yet highly effective solution in safeguarding digital payments. Verifying the account details helps the payer to confirm if the account they're sending payment to belongs to the correct owner.
In the simplest form, Confirmation of Payee runs on a secure API-driven architecture that verifies account details in real-time. The check starts when the payer or payee sets up a new payee or amends details with their banking platform. The payer must enter the account details including name, sort code, account number and account type (business or personal) to validate details to determine if they’re a match before alerting the payer of any discrepancies.
By cross-referencing key account details, the system then returns a result of:
- Match: The name and account type you supplied matched the details on the account
- No: The name is a close match
- No: The name doesn’t match the name help on the account
- Unavailable: It’s currently not possible to check the name because of a timeout, the account doesn’t exist etc
How can Confirmation of Payee prevent fraud?
APP fraud is one of the simplest, yet most effective tactics in a fraudster's book. Levelled at individuals and enterprise companies alike, it involves fraudsters tricking somebody into sending money to an account by pretending to be someone else. Historically, this has been a quick win for the fraudsters as they will have conducted thorough research to back up their claim, and, without any concerns or a simple way to confirm their identity, many people will comply and send the payment.
No two bank accounts use the same details. Confirmation of Payee takes advantage of that by creating an alert system when a user is given false or incorrect information, prompting them to make further checks to uncover any fraudulent activity.
Phishing scams such as CEO Impersonation are types of APP fraud, they are typically done via email and often in large numbers. Although they tend to be easier to spot, fraud tactics are becoming increasingly sophisticated and convincing thanks to the latest technological advancements. Confirmation of Payee can combat these tactics and provide an extra layer of security in the payment process, safeguarding your business against any financial losses or implications.
The new bank verification tool has eliminated the need to contact suppliers directly to verify the bank details. It’s a quick-win solution that simplifies the customer onboarding process and saves us from the painstaking procedure of manual verification over the phone.
Melanie Chandler
Operational Procurement Officer
Benefits of Confirmation of Payee
Launched in 2020, Confirmation of Payee was designed to give users greater assurance that their payments are being sent to the intended recipient, therefore not being deliberately or accidentally misdirected. Today, the scheme has been implemented by over 100 organisations regulated by the Financial Conduct Authority (FCA) or equivalent European regulatory bodies, completing over 1.9 million checks each day.
Prevent fraud and payment errors
Always be sure you know who you’re paying by cross-referencing account details in real-time to prevent misdirected or fraudulent payments.
Reduced operational costs
Reduce the occurrence of financial losses associated with disputes, chargebacks and the recovery of expenses by upfront and regular cleansing checks for operational savings and enhanced payment accuracy.
Enhanced operational efficiency
Ensure account accuracy when onboarding new suppliers by automating manual checks to streamline the verification process with bulk and individual checks, removing the reliance on banking systems.
Better customer relationships
Improve customer trust and confidence by adding a layer of security to your payment process to deliver an efficient and secure end-to-end payment process.
Faster time to value
Adopt a zero-change approach by integrating bank account verification into your payment and onboarding workflows with pre-built connectors to facilitate quick and easy integrations into existing business systems.
Coverage
Always be sure you know who you’re paying. Creditsafe has 97-99% coverage of UK current and business accounts.
How can you take advantage of Confirmation of Payee?
Whether you’re a bank or a multinational enterprise, Creditsafe provides an accessible Bank Account Verification solution through our user-friendly API and connectors. Our connectivity options are designed to facilitate quick and easy integration into existing systems, offering businesses the flexibility to deploy CoP functions.
Together, with the largest coverage of UK personal and business bank accounts, Creditsafe removes the complexity of integrations typically associated with new technology and enables businesses to power more and secure complex payments with ease.
Ready to safeguard your payments today?