CoP - Some Questions and Answers
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Q – What is Confirmation of Payee (CoP)?
A – In the past, when you (the Payer) made an online payment to someone (the Payee) the account details you provide were validated against Sort Code and Account Number. Confirmation of Payee checks those as before, but also validates against the Account Name.
Q – Why does that matter?
A – Partly because it helps avoid accidentally paying the wrong person by typing in the wrong Sort Code or Account Number. If the name doesn’t match, then you will be asked to check. The main purpose though is to reduce the risk of ‘Push Payment Fraud’, in which a Payer prompted by a fraudster to send money to an incorrect account. Fraudsters are always keen to know details of your financial life. For example if one discovers that you make large payments to ‘Grabbit and Runn Solicitors’, the fraudster can send a spoof invoice purporting to be from them but with different a different Sort Code and Account Number – remember the actual account’s name wasn’t checked. Without Confirmation of Payee, you may not notice the Sort Code and Account Number are wrong and make the payment. With Confirmation of Payee, the name check automatically runs and responds with ‘Fine’ – it matches, ‘No’ – completely different, or ‘Maybe’ – you are asked to verify.
Q – Does it reduce fraud?
A – Perhaps surprisingly, yes! It’s only a simple check, but the Banks who have implemented CoP so far report a significant reduction in fraudulent payments. In addition, there is evidence of a ‘concentration risk’ - fraudsters are turning away from Banks with CoP and focussing their attention on Banks that still only operate the older style verification.
Q – Is it foolproof?
A – No, but it really helps. Fraudsters could of course create accounts with similar names in their ‘spoof’ accounts – ‘Grab It and Run Solicitors’ for example. However, that can be quite a lot of work, and fraudsters usually prefer an easier way so are deterred.
Q – Do the customers like it?
A – Yes, absolutely! Despite the downside described above, the public reaction has been overwhelmingly positive. Customers are increasingly expecting their Banks to provide CoP and those who do have a competitive edge over those who don’t.
Q – Are there any downsides?
A – Yes. The main downside is to do with the fact that checking names is not simple. For example is ‘A Evans’ the same as ‘Anthony Evans’, or ‘Dr RAS Evans’? The answer is yes by the way, but will the automated check know that? It gets even more complicated when dealing with business names. Name matching has therefore caused some much-publicised irritation amongst users, with payments rejected for no apparent reason or present the customer with clunky and annoying validation steps. These irritations are however the subject of much ongoing improvement work by Banks, and many of the oft-quoted examples are actually from early days of the service when things were still settling down. Also, Payees are now getting into the habit of making sure they tell Payees what the correct Account Name is. So confusions do still happen, but much less as time goes by. There is much more noise than substance around this topic.
Q – So who provides a CoP service at present?
A – The initiative was kick-started by the Payment Services Regulator (PSR) who mandated the UK’s main six Banks (RBS, Lloyds etc) and they all went live around June 2020. Since then a number of other Banks have also joined – for example Co-op, TSB, Revolut.
Q – Who runs the CoP scheme?
A – It is organised by Pay.UK, with the underlying Trust and Security framework provided by the UK’s Open Banking Implementation Entity (OB). Individual Banks implement their own CoP services, which effectively sit ‘on top’ of their existing Open Banking services.
Q – Is the scheme open to all Banks and Financial Institutions?
A – Not yet. Because CoP sits ‘on top’ of Open Banking services you need to already registered, or eligible to register, with OB (technically, ‘PSD2 compliant’). This is referred to as ‘Phase 1’.
Q – Is that going to change?
A – Yes. ‘Phase 2’ shall enable a ‘CoP-only’ role, starting to separate CoP from OB functionality. In addition it enables Building Societies who rely on Secondary Data for Account Numbers. However, the practical availability of all this is not likely to be until early 2022 – it relies on all the main participants deciding to upgrade to the new Phase 2 standards.
Q – I am not sure if I am eligible to launch a service. What do I do?
A – You can do several things. Contact Pay.UK to register your interest and get information. Contact Open Banking to find out practical details of what is required, and visit/register on the Confirmation of Payee Network, which is an independent CoP Interest Group run along the same lines as Open Banking Excellence.
Q – The main 6 Banks were mandated to join. Am I likely to be mandated?
A – I am not aware of any such plans but check with Pay.UK. However, a mandate probably isn’t necessary. Fraudsters shall be concentrating their efforts on Banks without CoP, and the service is popular with customers - giving those with CoP a competitive edge.
Q – Should I launch in Phase 1 or Phase 2?
A – If you can, absolutely Phase 1! Sooner the better for fraud reduction and customer service.
Q – OK, I’m interested in creating my own CoP service. What are my choices?
A – You can either decide to implement the entire solution yourself, or bring in an service provider. There is a list of service providers (about 6 now) on the Confirmation of Payee Network. It’s better to register because this enables you to get more information on each (we are independent of all suppliers). We also publish Newsletters and shall soon be resuming our workshops. Remember that CoP sits ‘on top’ of OB services. This is fine if you already have such services, but if you don’t it’s more work. There is however one supplier who can give you the whole thing in a single service.
Q – I’ve got some more questions, can you help?
A - Be delighted to, I and the members of the CoP community are happy to support you. This is a vital service, and it has already saved customers millions – it needs to be available to all as soon as possible in the relentless race against fraud.