Confirmation of Payee: PSR has directed an additional 400 organisations to join the scheme

Where are we and how did we get here?

With the increasing levels of Authorised Push Payment (APP) fraud, something needed to be done to turn the tide against the scammers. In response, the Payment Services Regulator (PSR) tasked Pay.UK with creating the Confirmation of Payee (CoP) scheme; for the first time, the Payer could verify the name of the account they were paying money into. The initial ‘phase 1’ of CoP was only mandatory for the UK’s 6 largest banks/building societies to join, but between them they covered 92% of the payments traffic. A few non-mandated banks, such as The Co-operative Bank, saw the potential benefits that CoP offered their customers and voluntarily joined the scheme shortly after. This further expanded the coverage of the service and thus increased its effectiveness at preventing both accidental and maliciously misdirected payments.

To further encourage more banks and building societies to join the CoP scheme, in July 2021 Pay.UK launched CoP ‘Phase 2’. With an eye to the future, CoP Phase 2 introduced many improvements;

• Mandated support for Secondary Reference Data (SRD) accounts made the service more inclusive for a wider range of financial institutions, such as building societies,
• A new Pay.UK controlled authorisation domain on the Open Banking directory reduced the administrative burden experienced in Phase 1,
• Tightened specifications and enforcement of Dynamic Client Registration massively reduced the shared technical burden when new participants joined the scheme.

Despite the successes of CoP, scammers will always look for the weakest point in any system. With CoP, this lies with all the financial institutions that are not part of the scheme. Therefore, for CoP to reach its fullest potential, it must become universal.

Where do we go from here?

In October 2022, the PSR announced a massive step towards achieving CoP ubiquity; extending the mandate to nearly 400 financial firms across the UK. This roll-out has been split into 2 tranches, with the first 32 firms mandated to join the scheme by 31 October 2023, and all remaining firms by 31 October 2024.

Looking further to the future, there are early discussions about extending the amount and type of data shared during a CoP check. For example, information about how long an account has been opened for, or how actively it is used, would be extremely valuable in the on-going fight against APP fraud.

How do I get there?

Not only does Exela have the experience, resources, and products to deliver multiple CoP projects in an 8-12 week timeframe, but we also have best in class technology and a roadmap to make those projects a success. While the industry often focuses on matching rates (the percentage of CoP requests that result in a match, might-be-a-match, or a no-match), more concern should be the accuracy of those results. After all, obtaining industry-leading matching rates is trivial; simply accept all but the most obviously erroneous requests. However, this provides little protection against fraud. Likewise, ensuring you capture almost every fraudulent request can be accomplished by rejecting all but exact matches on the names, but this provides a terrible user journey and will result in many customer complaints. The true art in name matching provides the lowest possible rates of both false positive and false negative matches while responding within a few hundred milliseconds.

Drawing on 3 decades of experience, Exela’s name-matching AI engine utilises Levenshtein Distance Analysis with sound-aware approximations, an industry-leading synonyms database, and dialect translations. The platform has been consistently tuned to perfection and delivers ultra-low levels of false-positive and false-negative responses. Furthermore, hosting on a high availability architecture ensures a quick response, typically under 100ms.

Exela;

• Have over 3 decades of experience in delivering real-time name matching services,
• Has technology used by over 400 financial institutions across 4 EU countries and the UK,
• Process many million name verifications every day,
• Can deliver a CoP solution within an 8-12 week project,
• Can provide Requestor and Responder CoP services, either individually or together,
• Has advanced technologies to provide the lowest levels of false-positive and false-negative responses.

Selecting a partner for any service within payments is not a trivial decision. With increasing oversight requirements, fewer suppliers reduce your governance and supplier management overheads. Exela is a better partner due to its comprehensive portfolio of banking and payments software and services, including the next phases of the NPA and its overlays.

Confirmation of Payee with Exela and why are they relevant?

Exela Technologies has a significant footprint in the UK, Ireland and across Europe and is a critical participant in the UK’s payments eco-system. In particular, Exela is the leading supplier of technology and services for the UK’s newest payment scheme, ICS (the Image Clearing System), and participates in both of the New Payments Architecture (NPA) overlays of CoP and Request to Pay (RtP).

As part of a collaboration with Vocalink, Exela provides much of the core clearing software for Pay.UK’s ICS scheme and an additional seven of the twenty ICS clearing participants use Exela for ICS technology and services. Request to Pay is an overlay of the NPA and, as a major billing and invoicing service provider across Europe, Exela has a deep and wide portfolio of software and services that met the needs of RtP and partnered with Mastercard to be the first participant on Pay.UK’s RtP scheme.

With respect to CoP, Exela has been providing and maintaining account name validation services for over 30 years, used and trusted by financial institutions across the UK, Germany, Austria, Hungary and Italy. That experience, coupled with providing services to three banks for Faster Payments investigations and adjustments, gave Exela an unrivalled insight into what a top-tier Pay.UK compliant CoP service needed.