What is Confirmation of Payee?

Confirmation of Payee (CoP) is the UK’s account name-checking service for faster payments and CHAPS (Clearing House Automated Payment System). Before a payer confirms a transfer, the bank checks the name they entered against the name held on the receiving account and warns them if they do not match. This is operated by Pay.UK and mandated by the Payment Systems Regulator (PSR). 

How does Confirmation of Payee works? 

Confirmation of Payee (CoP) works by checking whether the name provided by the payer matches the account details held by the recipient’s Payment Service Provider (PSPs) before authorizing the payment. It is an API-based account name checking service that allows PSPs to verify payee details without using a central database. 

The process follows as: 

1. The payer enters recipient details such as the account name, sort code, and account number.
2. The payer’s PSP sends a CoP request to the recipient’s PSP for verification.
3. The recipient’s PSP checks the account details against the name registered on the account.
4. The recipient’s PSP returns a response showing whether the details match or not.
5. The payer reviews the result and decides whether to continue with the payment.

The CoP response falls into four categories: 

Confirmation of Payee UK Rules and Regulations: 

Confirmation of Payee is not created through a standalone law. Instead, it is implemented through directions issued by the Payment Systems Regulator (PSR) under its regulatory powers over UK payment systems. The service is operated through industry standards developed by Pay.UK. 

Confirmation of Payee and Faster Payments:

Confirmation of Payee is closely linked with Faster Payments, the UK’s near real-time payment system. Before a Faster Payment is completed, CoP allows customers to verify that the recipient account belongs to the intended person or organisation. This reduces the risk of funds being transferred to fraudulent accounts or incorrect recipients. Most Faster Payments participants covered by PSR requirements must support CoP checks.

Confirmation of Payee and CHAPS: 

CHAPS (Clearing House Automated Payment System) is a UK high-value payment system commonly used for large-value transfers. CoP also applies to eligible CHAPS payments, allowing customers and businesses to confirm recipient account details before initiating transfers. Pay.UK states that CoP can be used across UK payment services including Faster Payments and CHAPS.

Why is Confirmation of Payee Important?

CoP helps PSPs to mitigate two major risks: 

1. Authorised Push Payment (APP) Fraud: APP fraud occurs when customers are deceived into authorising payments to accounts controlled by criminals. CoP adds an additional verification step before funds are transferred.
2. Incorrect Payments: Many payment errors occur because users enter incorrect account information. By checking account names before payment approval, CoP helps reduce accidental transfers.

How Shufti helps

Shufti’s bank account verification software checks the applicant’s identity and the account holder name together before an account is linked, and again on payouts, withdrawals and beneficiary changes. CoP tells the payer whether a name fits an account. Bank account verification tells you whether the person behind it is real.