Name-check service for online payments delayed till next March

At the moment, when you transfer cash online the sort code and account number isn't checked against the name of the account holder. Criminals can exploit this loophole by posing as someone else and tricking people into sending money to the wrong account.

But with the new 'Confirmation of Payee' service, announced in October 2018, banks will double-check whether the name attached to a payment matches the sort code and account number, and warn you if it looks like you're about to send money to the wrong account.

The Payment Systems Regulator (PSR) had originally consulted on requiring banks to have the service up and running by 1 July 2019. However, it's now consulting on a new date of 31 March 2020 following concerns banks wouldn't be able to meet the original deadline.  

For more info on preventing fraud, see our Stop Scams guide.

How will the service work?

The Confirmation of Payee service was developed by Pay.UK, which runs the UK's retail payment systems.

The sender's and recipient's banks will need to be using it for it to work on a particular payment, and it'll work whether you're making a payment to a company or an individual.

When you go to make a payment online, banks will be able to check the name on the account of the person or organisation you're paying. The intended payee's bank will carry out the check and advise you of the best course of action. 

With this check, you'll be shown one of three answers:

• "Yes". The bank will confirm that the name and details match, and you can continue with the payment. 

• "No, please check". If you've used a similar name to the correct account holder – for example, if you spelled their name wrong or used a nickname by mistake – the bank will tell you the actual name of the account holder. You can then confirm that the name is correct and continue with the payment, or cancel the payment and contact the payee to check their details.

• "No, the name is wrong". If the name you've entered doesn't match the account details and isn't even close, you'll be advised to cancel the payment and contact the payee. You can still choose to continue with the payment, but you'll be warned that this is at your own risk. 

It is not clear exactly how the service will work via banks' websites, nor is it clear if the service will be available for payments made by app.

When will the service be available?

The PSR is now consulting on two new deadlines:

• By 31 December 2019, banks should have the capability to respond to confirmation of payee requests from other banks. This has been delayed from the originally proposed deadline of 1 April 2019. 

• By 31 March 2020, banks must send confirmation of payee checks to their customers when they make a transfer online. This has been delayed from the originally proposed deadline of 1 July 2019. 

The new deadlines would apply to the six biggest banking groups in the UK, which the PSR says are involved in about 90% of bank transfers. 

It says it expects the remaining providers to introduce the service at the earliest opportunity.