Confirmation of Payee - the journey so far

The Covid-19 pandemic has seen a fraud evolution as criminals continuously search for new ways to target potential victims. The lockdown provoked a surge in digital payments and e-commerce, giving fraudsters more to take advantage of. This is illustrative that the scale of the problem is only worsening, despite the efforts of the banking and finance industry.

In the first half of this year, criminals stole a total of £753.9 million through fraud, an increase of over 30 per cent when compared to H1 2020, according to UK Finance data. The silver lining here is that the advanced security systems used by banks prevented a further £736 million from being taken.

What's interesting to note about this year's data is that, for the first time ever, criminals focused their activity on authorised push payment (APP) fraud, where the customer is tricked into authorising a payment to an account controlled by a criminal. Using tactics such as scam phone calls, text messages and emails, as well as fake websites and social media posts, criminals are succeeding in tricking consumers into handing over personal details and passwords. This information is then used to target victims further and to convince them to authorise payments.


About Confirmation of Payee

The recent surge in APP fraud, while shocking, was sadly not unexpected as it has been a growing fraud trens. However, certain  more innovative players and government bodies have been preparing long in advance to take steps to address this growing threat. For instance, in the Netherlands, nearly the entire market is covered by what is known as the ?IBAN-Name Check?. Rabobank developed the IBAN-Name Check in 2016 within the framework of its own innovation programme (which then gave birth to SurePay) - the service checks that the name of the beneficiary entered by a customer before a transfer is correct. By confirming the payee's name matches with the name on the intended recipient's bank account, customers can avoid misdirected payments and reduce push payment fraud. 

Similarly, Pay.UK launched a Confirmation of Payee (CoP) service in 2019, which has now been successfully implemented by several of the UK's largest banks and other payment service providers (PSPs). Today, large volumes of Confirmation of Payee checks are being requested, averaging more than one million per day. SurePay processes more than 35 per cent of these requests.

According to the analysis of over four billion checks SurePay has performed in the Netherlands since 2017, a Confirmation of Payee service has the potential to result in an 81 per cent fall in reported fraud/scams, and a 67 per cent reduction in misdirected payments.


A step further

But while some of the largest banks in the UK have now adopted CoP, some players have yet to do so. This is creating a dangerous gap in the market that fraudsters are way too savvy to ignore. According to the Payments Systems Regulator, fraudsters are adapting their strategies and seeking out softer targets, targeting market segments which largely haven't yet adopted CoP, such as building societies.

Businesses are also facing a new wave of APP, CEO, and impersonation fraud as criminals have taken advantage of the uncertainties caused by the pandemic to pose as senior people in a company, requesting urgent funds to be transferred.

Another gap in the market is cross border payments. As SurePay is expanding across Europe, our aim is to also make international payments safer by providing cross border CoP checks in addition to checks on domestic transactions.

There is no denying that the pandemic has had a massive impact on the payments landscape as UK Finance's ?UK Payments Markets 2021? report clearly shows. Key points include more online transactions and an increasing number of people entering this market - all welcome signs. However, as we?ve shown, fraud is also on the rise. To meet the needs of the ever-changing digital payment landscape, it's becoming increasingly crucial to have a CoP solution that's easy to implement and can offer customers a full range of technical capabilities from API to batch payments. Eradicating payment fraud will require a collective effort from every corner of the payment community.


David-Jan Janse, CEO and co-founder of SurePay