UK Confirmation of Payee: Mandate, Details and Challenges

Introduced in 2020, Confirmation of Payee (CoP) is an industry-wide initiative to combat fraud and accidental misdirected payments. With the soon-approaching deadline to adopt CoP, we delve into the mandate, how CoP works, and associated challenges.

Why Confirmation of Payee? The Mandate and the Problem

Authorised Push Payment (APP) fraud is a significant concern in the UK. These scams often involve tricking victims into sending money to fraudulent accounts. To address this issue, CoP was mandated for all UK banks and payment service providers (PSPs) offering Faster Payments, BACS, and CHAPS services.

APP fraud has become a significant concern in the UK, with losses steadily increasing in recent years. According to UK Finance reports, a staggering £1.2 billion was stolen through APP fraud in 2022, a decrease of 8% compared to 2021. However, this decrease might be misleading as it follows a period of significant growth. Let’s take a closer look at the recent trends:

• 2021:  £1.29 billion lost to APP scams, a worrying 21.7% increase from the previous year.
• 2020: £1.23 billion lost, representing a 5% rise compared to 2019.
• 2019: £958 million stolen through APP fraud, a significant 29% jump from 2018.
• 2018: £742.7 million lost to APP scams.

These figures paint a concerning picture, highlighting the urgency of measures like Confirmation of Payee to combat this growing threat. Here’s a great in-depth read on Confirmation of Payee – Guide to Secure Transactions, Benefits & How It Works 

How Does Confirmation of Payee Work?

CoP acts as a safety net for your payments. Before a payment is finalised, CoP checks the name of the payee (the person or business you’re sending money to) against the information held by the recipient’s bank. Before hitting send, this lets you verify if the name matches your intended recipient. There are three possible outcomes:

• Match: If the name matches, the payment is processed normally.
• Partial Match: There might be a slight discrepancy (e.g., initials instead of a full name) in some cases. You’ll be alerted and have the chance to confirm or amend the payment.
• No Match: If the name doesn’t match, a red flag is raised, and you’ll be warned and advised to double-check the recipient’s details.

Benefits and Challenges of CoP

CoP has demonstrably increased payment security. Pay.UK reports suggest a positive impact in reducing accidental misdirected payments. However, challenges remain.

• Account Exemptions: A small number of accounts with technical limitations are exempt from CoP, creating potential loopholes for fraudsters.
• Shifting Scams: While CoP combats traditional APP scams, fraudsters may adapt their tactics, requiring continued vigilance from both providers and users.

The Future of CoP with XBP Europe 

Despite the challenges, CoP is a significant step towards safer payments in the UK. As the system matures and exemptions are addressed, its effectiveness will likely increase. Pay.UK is actively monitoring CoP’s impact and exploring ways to enhance its capabilities further. 

While Confirmation of Payee offers a robust security framework, its effectiveness hinges on the quality of the underlying technology. XBP Europe takes CoP a step further with its industry-leading, fully managed cloud-based solution. We host a comprehensive CoP Endpoint, an authorization server, a highly accurate AI-powered name-matching engine recognised by the Payments Association and shortlisted for the Pay360 Awards 2023, and a secure account name database.

Unlike some providers solely focused on maximising “yes” responses, XBP Europe prioritises accuracy, minimising both false positives (incorrect matches) and false negatives (missed matches) to ensure the highest level of security for your transactions. Furthermore, our flexible solution integrates seamlessly with your bank’s core systems through API and web portal, allowing you to leverage existing and future CoP participant connections.

XBP Europe delivers complete peace of mind with the most advanced and reliable CoP technology. Our industry-recognised AI-powered name-matching engine minimises errors, ensuring the highest level of security for your transactions. Furthermore, our rapid deployment process gets you up and running with CoP quickly and efficiently. Learn more on how XBP Europe can safeguard your payments and streamline your transition to CoP.

Taking Control of Your Payments

By understanding CoP, you can play a vital role in protecting yourself from fraud. Always double-check recipient details before making a payment, and be wary of unsolicited payment requests. Look for the CoP confirmation when making payments – it’s a sign that your provider is prioritising your financial safety.

Remember: Confirmation of Payee is powerful, but vigilance is still key. Together, we can create a safer payment environment for everyone in the UK.