UK Confirmation of Payee: Mandate, Details and Challenges

1. Confirmation of Payee in the UK

The UK payments industry is at the forefront of innovation and best practices, be it for Open Banking or Real-time payments. Of the many standards and innovations being created in the UK's payments landscape, Confirmation of Payee (CoP) is one of the overlay services defined by Pay.UK

1.1. About Pay.UK

Pay.UK runs the UK’s retail payments operations, which includes the BACS Payment System1, the Faster Payment System2, CHAPS3, and the Image Clearing System4. They also deliver a variety of services relating to payments, such as the Current Account Switch Service, Confirmation of Payee and Request to Pay.

Through its infrastructure and services, Pay.UK enables billions of pounds in payments to be made safely and securely every single day. At the same time, it is creating common standards for the industry and working to modernize the UK's national payments infrastructure through the New Payments Architecture program and multiple overlay services.

Confirmation of Payee is one such initiative mandated by Pay.UK.

1.2. About Confirmation of Payee (CoP)

Confirmation of Payee allows payers to check the details of who they are paying before they confirm the transaction. It was launched in 2020 and has now been successfully implemented by a number of UK banks, building societies, and other payment service providers (PSPs). The aim of the service is to reduce certain types of fraud, like the Authorized Push Payment (APP) scam as well as prevent misdirected payments.

Before the introduction of CoP, a payer would provide their Payment Service Provider with all of the payee’s details, including their bank sort code and account number, together with the name of the person or organization they intended to pay. The sort code and account number were then used to route the payment in accordance with the instructions given. However, there was no facility for the payer to check and confirm the name of the account holder before the payment was sent.

Authorized Push Payment (APP) scams occur when a person or business is tricked into sending money to a fraudster posing as a genuine payee. These types of scams can have a devastating impact on the people who fall victims to them. According to research conducted by the banking industry organization UK Finance, the amount lost to APP fraud is as follows:

Confirmation of Payee provides payers with greater assurance that their payments are being routed to the intended recipient and, therefore, are not being accidentally or deliberately misdirected.
In particular, it addresses certain types of Authorized Push Payment fraud by providing a platform for Payment
Service Providers (PSPs) to give effective warnings to payers about the risks associated with proceeding with a
payment to an account where the name does not match.
Greater adoption of Confirmation of Payee will likely reduce the overall Authorized Push Payment scams in years to come. Also, CoP has been mandated for all UK banks and payment service providers that offer Faster Payments, BACS and CHAPS payment services. This means that all major banks in the UK are required to implement CoP and other financial institutions that offer payment services to their customers.

2. How Confirmation of Payee Works

CoP operates by verifying the recipient's information against the data stored by their financial institution:

• When a payer initiates a payment, they are prompted to enter the recipient's name, account number, and sort code.
• This information is then transmitted to the recipient's financial institution, which verifies the details
  against its records.
• If the information is a match, the financial institution confirms that the payment can proceed.
• If the information does not match, the financial institution will notify the payer that it cannot authenticate
  the recipient's identity and that they should verify the details before proceeding with the payment.

There are four possible outcomes for a Confirmation of Payee request:
Yes – If the customer has used the correct account name, the customer will receive confirmation that the details
match, and can proceed with the payment.
Close match – If the customer has used a similar name to the account holder, that customer will be provided with the actual name of the account holder to check. They can update the details and try again or contact the intended recipient to check the details.
No match – If the customer has entered the wrong name for the account holder, they will be told that the details
do not match and they will be advised to contact the person or organization they are trying to pay.
Unavailable – This occurs when it is not possible to check the name due to technical issues, for example, as a result of a timeout, customer opt-out, or if the account doesn’t exist.

Read more to find out:

• Other use cases of confirmation of payee
• What confirmation of payee means for consumers and financial institutions
• Components involved in CoP
• CoP requester model
• Challenges to consider
• Why connectivity to Open Banking is complex...and more.

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