Online banking: don’t pay the wrong person by accident

Chris Torney / 06 December 2016

Britain’s banks are introducing a new system to prevent customers making mistaken payments or having money taken by fraudsters.

Proposals outlined in November 2016 by the Payment Strategy Forum will give extra reassurance to consumers when it comes to making direct transfers from their bank. 

At present, anyone who sends money to the wrong account – for example, by mis-typing a digit of an account number or sort code – can face significant difficulties in having the cash returned. 

In some cases, the money simply has to be written off as lost, particularly if the recipient refuses to acknowledge that they have been paid by mistake.

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An extra confirmation

But the Payment Strategy Forum says it will bring in a new service called “confirmation of payee” when transfers are made. This will ensure that a confirmation of the recipient’s details such as their name is sent to the payer in advance of any funds leaving their account.

The change should also help flag up any possible inconsistencies between who people think their transfer is going to and who is actually going to receive it. In some cases, fraudsters pretend to be representing reputable companies, for example, but then give their own bank details when requesting payment: “confirmation of payee” is designed to expose this type of con as well.

Ruth Evans, chair of the Payments Strategy Forum, says: “Around £755 million was stolen from UK bank accounts last year and the problem looks set to worsen as criminals become more technologically savvy. We need to address the issue head on.”

Another service, “request to pay”, means that account holders will have to give permission for money to be debited from their accounts for regular payments such as gym membership or utility bills: this should help avoid money being taken when there is not enough cash in the account to cover it.

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How you can protect yourself

The Payment Strategy Forum says the new measures should be in place by 2018. 

But according to industry body Payments UK, there are still a number of steps people can take to protect themselves – particularly against making erroneous payments – in the interim.

These include:

• Always double check the sort code and account number when sending a payment – and ask the recipient to confirm their details are correct.

• If you’re sending money to someone you haven’t made a transfer to for a while, make sure they still use the same account.

• Send a test: for extra reassurance, you could send a low-value test payment and check the funds are received successfully.

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