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New payment safeguards to be introduced for online shopping and banking
The Payments Systems Regulator (PSR) and personal finance experts have recently welcomed the ‘brilliant news’ regarding new safeguards which are being introduced to protect people when they pay online or use banking apps.
The payments industry announced these changes which allows consumers to check that they are paying the right person before payment is sent. Consumers will also be asked to confirm payments when money is taken out of their account via direct debit. These plans, which are due to come into force in 2020, have been put forward as a measure to help prevent fraud and stop accidental money transfers.
Chair of the Payments Strategy Forum, Ruth Evans, spoke to the BBC about these proposals; “Around £755m 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.”
The two new safeguards will work in slightly different ways but are both designed to make the consumer more aware of the transactions they are making to help protect them. The safeguards are:
- Confirmation of Payee – If you, as a bank account holder, make a payment online, you will receive a message from your bank confirming the name of the person you are paying. Only after you have clicked ‘OK’ will your payment go through to the person you are trying to pay. This safeguard is designed to stop people paying the wrong person whether it is an accident or because you are being tricked to do this by fraudsters.
- Request to Pay – If a company wants to make a regular payment (direct debit) from your bank account then you, as account holder, will receive a message asking you to approve payment. Again, only after you have clicked ‘OK’ will be the payment be processed.
These reforms should make it easier for consumers to stay informed about their cash and any payments they make. Although, many experts are happy with these new proposals, consumer watchdog magazine Which? are not as enthusiastic.
Managing director of Which? Home and Legal Services, Alex Neill, commented on the new payment safeguards; “This is a welcome first step, but is not a cure… 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 changes are due to come into effect in 2020 and until then the public will have to remain vigilant when it comes to bank transfer scams and any sort of fraud. If you have been a victim of this kind of fraud, make sure you contact your local police station to report this.