Two new payment safeguards to protect online consumers unveiled
30 Nov 2016
The Payments Strategy Forum – the body set up to analyse and improve the payments industry – has unveiled two new safeguards designed to protect people who make payments online or via banking apps.
The first safeguard, known as ‘Confirmation of Payee’, will mean that when a bank account holder makes a payment online, a message will come back from the bank confirming the name of the person they are paying, which they will need to confirm before the payment goes through. This is aimed at preventing people paying the wrong person accidentally or being tricked into doing so by fraudsters.
The second, called ‘Request to Pay’, will mean that when a company wants to take a regular payment from a customer's account, a message will be sent to the consumer to confirm the payment before it is taken. Examples might be monthly gym membership fees or extra data charges from mobile phone companies.
The Payments Strategy Forum was set up by the Payment Systems Regulator (PSR) in 2015. The Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority are observers on the Forum.
Alex Neill, Managing Director of Home and Legal Services at Which?, stated: ‘This is a welcome first step, but is not a cure and won’t be enough to protect people from bank transfer scams.
‘With scams on the rise and scammers becoming ever more sophisticated, the financial regulators need to go further to ensure banks adequately tackle bank transfer fraud and safeguard us from scams.’
The new safeguards are due to come into force by 2020 at the latest.