The growth of online banking and payments has seen a corresponding rise in fraud. Scammers have become increasingly adept at exploiting vulnerabilities in digital transactions, and one of the most alarming trends over the past decade has been the increase in Authorized Push Payment (APP) scams.
This is where a payer is tricked into authorising payment to a fraudster who is masquerading as the intended recipient. The new Confirmation of Payee (CoP) service, launched in 2020 with the UK’s six largest banking groups, ensures that there is an exact match between an account holder’s name and account number. Not only does it block fraudsters, by verifying that all the transaction details have been entered correctly, CoP also prevents misdirected payments.
Reversing the trend with CoP
Crime figures highlight the scale of the problem. In , it was revealed that banks and their customers lost £479 million in 2020 as a result of APP fraud. This was split between personal (£387.8 million) and non-personal or business (£91.3 million). However, the Payment Services Regulator has reported on crime figures by the six leading banks that have adopted CoP, against a continuing rise among those who have not, and is seeking ways to ensure all banks and financial institutions use the service. It is on Phase 2 and inviting comments by email at COP@psr.org.uk up to 5 pm on 30 June 2021.
Making CoP mandatory beyond the big six would be a logical and sensible move. While technology has been a great enabler for fast and efficient payments, there will always be a serious risk of fraud unless progress is matched by tighter security.
The benefits of CoP
Here’s a summary of why all banks and financial institutions should adopt CoP.
- Introduces a name-checking control to prevent fraudster’s from exploiting a known weakness, and avoids misdirected payments as a result of keying errors
- Reduces the risk of financial loss to businesses as well as individuals
- Reduces the time and cost spent on investigating and resolving fraud issues
- Reliable and cost-efficient because it uses a payee’s bank details in real-time and avoids more cumbersome verification methods such as a ‘penny drop’ check (where a very small test amount is sent to verify that it is being received by the intended recipient)
- Better customer experience and increased trust because payments go smoothly and securely
- Particularly useful for lenders, neobanks/challengers and providers of accounting software, as these sectors are often targeted by fraudsters
- Enhanced security means enhanced reputation. Payment service providers who use CoP are less likely to suffer reputational damage and will boost customer confidence and loyalty
- Payment service providers who don’t participate will be at a competitive disadvantage and may face greater liability in the event of fraud
Banks and financial institutions should not see CoP as an administrative burden. Some may be dragging their feet because they feel it is an expensive and time-consuming change. Instead, they should consider it an urgent requirement that will add value to their role and win customer approval. Failure to make the transition will leave them exposed, and there is already evidence that fraudsters are focusing on banks and institutions that lack this important safeguard. In the eyes of customers, those who don’t provide CoP will be viewed as risky.
How Banfico helps
The Payment Service Regulator is keen to move on to Phase 2 of CoP, which will encourage further participation in the service. Banfico fully supports the move and can help banks and financial institutions make the transition. This includes simple onboarding, coverage of successive phases, and flexible audit logging and management to support investigations and liability identification. See for a full list of all the features and benefits. With Banfico, you can be set up for CoP in just four weeks. For more information on CoP, see Banfico’s article .
Join Banfico’s CoP webinar
Want to find out more about CoP from an expert panel? Banfico’s webinar on Friday,18 June, from 13:00 to 14:00 BST, will provide detailed insights and help you understand the user journey, Phase 1 and 2 timelines and targets, and many other CoP topics. The webinar will conclude with a Q&A session.