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Beneficiary identification check could cut risk of payment error and fraud - report

Payments UK's latest report recommends that an additional confirmation of payee identity should be introduced to reduce the risk of payment error and fraud. The claim is made in the report A focus on Confirmation of Payee for customers making payments.

Developing a new ‘beneficiary identification’ capability for electronic payments has potential advantages, according to the report. It would allow consumers or businesses making an electronic payment to check the beneficiary’s account details before confirming the payment – this might be the name or some other information.

Payments UK suggests that the process could involve the payer using a ‘proxy’, such as the beneficiary’s mobile phone number or email address, instead of having to enter an account number and sort code.

The report's analysis identifies a number of existing and emerging Confirmation of Payee products in the UK and around the world. It goes on to suggest that one way of achieving ubiquitous beneficiary identification would be to extend a capability similar to the name check currently provided by the mobile payments service, Paym, which uses an individual's registered mobile phone number to look up the individual's name, allowing the payer to confirm the beneficiary's identity.

According to Tim Yudin, Payments UK’s director of design and delivery, “offering payers the ability to confirm who they are paying before they make a payment could help stop money being accidentally sent to the wrong account, make life more difficult for fraudsters and give customers even more confidence when making payments.”

CTMfile Take: Payments in the UK already have some “world-leading services that seek to address this issue” according to Tim Yudin. However, a 'Confirmation of Payee' function could reduce payment risks for both businesses and consumers.

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