News finally broke this week that banks in the UK will require a person’s name to be correct when making payments online. No, we haven’t accidentally re-posted an article from years ago, this is a new procedure that’s only now reached the point of being implemented. It’s not even going to happen quickly; Pay.UK, which is the company that oversees all of the major payment systems in the UK, isn’t actually making the change until July of 2019.
How It Works Right Now
When you make a payment into an account through an online banking system, you’re required to enter the amount you want to transfer, the sort code, the account number, a reference if you so desire, and the name on the account you’re making the transfer to. It may shock you to find out that right now, the only details which are actually checked are the sort code and the account number. Everything else, the bank presumes you’ve got correct, and doesn’t attempt to verify.
No Issue For Receivers
This isn’t so bad if you’re receiving money. So long as a person has your sort code and account number correct, anyone can transfer you money without needing to know your name. This could even be seen as a useful feature for people who make money online anonymously, for example eBay traders.
It’s not currently clear how the move will affect those who have existing payment systems set up without verifying their name. It’s possible that, in future, you may have to provide additional identity verification to companies like PayPal before they can transfer funds to you. This could be something of an irritation if you receive money online from a number of different sources, and you just want to do something simple like collect your casino winnings from a Cleopatra slot game. Casinos are actually one of the most developed industries for online payments and many casinos offer e-wallets such as Neteller, Skrill, EcoPayz, PaySafeCard and ofcourse wire transfer services such as Trustly and Entropay.
The Risk Of Loss
The reason the rule is being introduced – and the fact that makes you scratch your head about why it hasn’t been done before – is to prevent people from accidentally transferring money to the wrong bank account. Right now, so long as you present a valid sort code and account number, any transfer you make from your bank will go through even if the name you enter is completely different to the name on the destination bank account. That’s a little bit upsetting if you’re transferring birthday money to a relative. It’s completely devastating if you’re transferring thousands of pounds to pay a large bill to an individual or company.
It’s not always a straightforward process to get it back, either; as a citizen you have no means of identifying where your money has been sent, and most banks are currently either unwilling or unable to reverse such a transaction after it’s gone through. In cases where it happens, police involvement is often required to right the wrong.
How The New System Will Work
Once the change has gone through, banks will be able to ‘see’ the name of the account you’re trying to transfer money to. If you enter the details correctly, the transfer will go through with no issue, just as it does today. If you get the details wrong, you may be presented with some options.
At face value, you might be concerned that you’ll no longer be able to pay somebody if you don’t get the name of their bank account exactly right. That isn’t always as easy as you’d think, for example is a person called Robert likely to have hold a bank account in their full name, or will they shorten it to Rob, or Bob? Perhaps they just use their initials followed by their surname?
Fortunately, the new system will be clever enough to identify this. If you enter a name which is close, but not quite right, an on screen notification will appear, telling you the name of the account you’re trying to transfer to, and ask you if the information is correct. If you’re satisfied it’s the right account, you can go right ahead and finish the transaction. If you’re not sure, you can back out of it before you lose your money.
If there’s no resemblance between what you’ve written down, the bank will prevent the payment from going through, and advise you to contact whomever you’re trying to pay in order to verify their details. In short, if you’ve got a fairly good idea of where the money is supposed to be going, you’ll be fine.
The Cost Of Fraud
The move can’t come quickly enough. Bank transfer fraud – a scam where a person or company will deliberately misrepresent who they really are in order to convince you to send money to them – has risen dramatically in recent years. It’s estimated that a total of £145m was stolen from customers in the UK in the first six months of this year alone, and that figure will only rise without new protections and checks being put into place.
Given the increasing ease with which payments can be sent from place to place – in the last few years alone we’ve seen the introduction of contactless payments, payment via app, and payment just by entering someone’s phone number – it’s felt a little like we’ve sacrificed too much security in the name of making things easier. When people are losing money in the scale described above, it’s only right that new measures are brought in to keep people safe – even if that means keeping people safe from themselves, and their love of new technologies. UK Finance, which is a trade body representing all of the UK’s banks as a whole, says the step is merely a first stage in a whole new raft of protections they’re considering, and that the industry as a whole is currently considering new options in the constant battle against fraud.
As general advice, if you don’t feel confident about a bank transfer you’re making online, the best advice is just not to do it. A genuine person or company won’t be unreasonably pushy about you making the transfer, and you should always feel completely confident in whomever you’re dealing with when handing over money or your bank details. Stay vigilant, and stay safe!