Next year, UK banks will be introducing name checks on all bank transfers in an effort to combat money transfer scams and lower the risk of online payments being accidentally sent to the wrong account.
Details of the ‘confirmation of payee’ technology were revealed this week by Pay.UK, the UK’s payment authority. This change will make the name of someone receiving a payment, just as important as their account number and sort code.
At present, anyone wanting to transfer money enters the intended recipient’s name, account number and sort code. However, the name isn’t checked. Under the current plans, banks and building societies should have the technology in place by April, and fully up and running by July next year, to ensure that senders are alerted if the name of a payee doesn’t match the account details.
How it’s going to work:
After entering the number and sort code of the account they wish to pay, the technology will enable bank customers to verify the name of the company or individual connected to that account before any money is transferred, either:
- 1. The system will confirm that the account name and details match and they can continue with the payment
- 2. If a similar name to the correct account holder has been used, for example, the name is spelt wrong or a nickname is used, the system will provide the correct name. The sender can then update the name and try again, or contact the intended recipient to check the details
- 3. If the name entered clearly doesn’t match, then the bank will advise to cancel the payment and contact the intended recipient. Customers can still choose to continue with the payment anyway, but they’ll be warned that it’s at their own risk
Some banks may start rolling this change out fairly sharpish to meet the deadline next July. Should your trading name not match the name on your business bank account, now would be the time to look at updating your details. To avoid any delays to your payments, we recommend that you guarantee your account details are crystal clear on your invoices. It might be worth taking the time to ensure all your clients, that might usually use your name or a nickname, are fully aware of the upcoming change and the payee name connected to your account.