Confirmation of Payee is a new name checking service for UK-based payments which has now been successfully implemented by a number of UK banks, building societies and other payment service providers (PSPs). The aim of the service is to reduce certain types of fraud as well as misdirected payments. Today, volumes of Confirmation of Payee requests are averaging more than one million.
Before the service was implemented a payer would provide their PSP with all the payee’s details, including their bank sort code and account number together with the name of the person or organisation they were intending to pay. The sort code and account number were then used to route the payment in accordance with the instructions given, however, there was no facility for the payer to check and confirm the name on the account being paid ahead of the payment being sent.
Confirmation of Payee is a way of giving payers greater assurance that their payments are being routed to the intended recipient and therefore are not being accidentally or deliberately misdirected. In particular, it addresses certain types of authorised push payment fraud by providing a platform for PSPs to provide effective warnings to payers about the risks associated with progressing with a payment to an account where the name does not match.
From July 2021, Confirmation of Payee functionality will be extended with a revised capability and simplified processes. This second phase will ensure the value of Confirmation of Payee can be introduced more widely to new participants should they choose to participate. In turn, this will increase the number of customers that can benefit from Confirmation of Payee following its successful introduction in 2020.
Existing Confirmation of Payee participants are supporting this change and are planning to adopt the new phase two capability before the end of 2021.
As we focus on the transition to the new capability, from 1 July Pay.UK will no longer be accepting applications for Confirmation of Payee phase one and will only be accepting applications from prospective participants to join the phase two environment.
Pay.UK will continue to support all Confirmation of Payee participants.
New firms planning on participating in Confirmation of Payee are invited to contact us so we can advise on the application options available and how to get involved.
How Confirmation of Payee works
Confirmation of Payee allows a payer to check that the name (including a personal / business account indicator) they give for a new payee is the same as the account name / type held by the payee’s PSP.
Pay.UK worked with stakeholders from across the industry to test and validate the Confirmation of Payee proposition and support the technical development of the Confirmation of Payee solution. This consultation process included testing with Pay.UK’s End User Advisory Council as well as independent research.
Details of the research findings and recommendations and how they were used by Pay.UK in finalising the Confirmation of Payee proposition, rules and guidance are available in the below report.
Confirmation of Payee - Phase 1
In recognition of the complexity of the new service, Confirmation of Payee has been developed in stages based on technical enablement and eligibility criteria; Phase 1 is live.
From a technical perspective, Phase 1 of Confirmation of Payee includes the provision of name checks only on accounts addressable by account number and sort code (i.e. with no additional reference required). Pay.UK encourages eligible PSPs wishing to join the service to get in touch in order to discuss any implications of joining Confirmation of Payee Phase 1 ahead of the launch of Phase 2.
To be eligible to enrol in Phase 1, a participant must also meet the following criteria:
- Be an account servicing PSP
- Have a sort code allocated with their own bank code in the EISCD
- Be an FCA registered entity
- Be registered as a full member of Open Banking for Payment Services Directive 2 (PSD2) purposes*.
*Please note: registering with Open Banking is a requirement, but can be undertaken in parallel with the Confirmation of Payee application process.
Confirmation of Payee - Phase 2
Building on the success of Phase 1, Pay.UK is now progressing a new phase of Confirmation of Payee (Phase 2) which will enable broader participation to create a ubiquitous capability for all account holding PSPs, if they choose to join. Current plans include enabling the service for the following:
- Smaller PSPs unable or unwilling to meet the full Open Banking PSD2 membership requirements
- PSPs regulated by non-PSD2 National Competent Authorities, such as those in the Crown Dependencies
- PSPs that do not own their own sort code in the EISCD
- Accounts addressable by secondary reference data.
Pay.UK is rolling out the new service elements from July 2021 and beyond. Existing participants are adopting the new services by the end of 2021.
Any potential new participant interested in finding out more about Confirmation of Payee Phase 2 should contact us.
Confirmation of Payee technical solution providers
Pay.UK has been informed by a number of firms that they are developing or have developed technical solutions for PSPs wishing to adopt the Confirmation of Payee service. Any PSP wishing to know the names of these solution providers or any firm wishing to be included on the list is welcome to contact us for this purpose. Please note Pay.UK does not endorse or accredit any of the solutions or providers included in the list.