On August 2, 2019, the UK’s Payment Systems Regulator (PSR) ordered the six large national banks – Lloyds, RBS Natwest, Barclays, HSBC, Nationwide and Santander – to assure implementation of Confirmation of Payee by March 31, 2020. Here’s what it means and implies.

What is Confirmation of Payee (CoP)?

CoP is an account name-checking service introduced by the PSR to provide greater assurance that payments are being received by the intended recipient. The current system uses sort codes and account numbers to determine where a payment is sent. However, there is no way right now for the banks to check the names on the beneficiary account. CoP, therefore, can help avoid payments being misdirected due to errors. According to Pay.UK, CoP should be a friction-free process using a simple indicator (such as a green tick) to show that the name has been validated. Additional friction will be built in for transactions where the validation fails.

Why is CoP important?

CoP is meant to act as an additional layer of security that can help deal with cases of Authorised Push Payment (APP) scams. In APP fraud, victims are manipulated into making real-time payments to fraudsters using social engineering attacks involving impersonation.  These APP scams reportedly cost UK consumers £345m in 2018, of which only £83m was recovered. With CoP, the payee’s name is matched with the account name, resulting in one of three possible outcomes:

  1. Yes, if the name of the payee and the name of the account owner matches.
  2. No, please check, if the names are similar but not the same. This gives the payer the actual name of the account owner, and asks them to check the payment details or with the recipient before proceeding.
  3. No, the name is incorrect, if the names do not match at all. In this case, the payer will be asked to contact the recipient.

What’s next?

The PSR directive is that by 31 December 2019, the top six banks must have the capability to ‘speak’ to each other, and the receiving bank must notify the sending bank if there is a mismatch.  By 31 March 2020, however, they will be required to send CoP notifications to the payer in all outcomes.

With CoP, the UK has started to take more steps to modernize the banking infrastructure and better improve security measures and deliver the banking and payments experience that today’s customers need. Penser provides expert consulting services in the payments and fintech sectors, and therefore, we pay close attention to key changes in regulations and innovations in the industry. We act as advisors to a number of financial clients on their digital transformation journeys, as well as support them with due diligence and strategic planning services. Click here to contact us for more information.


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