Banks launch confirmation of payee service, which is to be rolled out between now and Easter

A new confirmation of payee service, designed to help thwart financial scams, launches Thursday.

Duncan Robertson CEO of GetVerified, a company established and owned by New Zealand banks to implement confirmation of payee and other anti-scam initiatives, says customers will notice the service in three scenarios. These are; when paying someone new, when editing an existing payee and when making a one-off payment.

"Instead of relying on initials or nicknames, customers will now need to provide both the account name and number of the recipient. The system will then check if the entered name matches the recipient’s bank records," says Robertson, adding the final decision to go ahead with a payment is the customer's.

"One of the biggest advantages of confirmation of payee is that it provides a result, usually a match, partial match, or no match, that prompts customers to pause and double-check. A partial match or no match serves as a red flag to ensure customers verify the details and consider whether they trust the person they are paying."

"There are no blocks to making payments, regardless of the result. But we encourage everyone to take a moment and think carefully before proceeding," Robertson says.

Following an inquiry by Parliament’s Finance and Expenditure Committee into banks’ processes and consumer protections against scams last year, Commerce and Consumer Affairs Minister Andrew Bayly in February asked banks to come up with a voluntary reimbursement scheme for customers who have been scammed.

Bank lobby group the New Zealand Banking Association also announced a series of anti-scam initiatives last September including; introducing a confirmation of payee service, supporting the establishment of a centralised, co-ordinated, multi-sector Anti-Scam Centre, and removing weblinks from texts to customers.

A report from Netsafe and the Global AntiScam Alliance released this month, which surveyed 1,071 people, estimates New Zealanders suffered annual losses to scams of about $2.3 billion.

Robertson says bank customers don’t need to take any action to enable the confirmation of payee service because it'll automatically be available once banks launch it.

"Banks are incrementally launching the service over the next three to four months. While some customers will see the feature immediately in their mobile and online banking apps, others will gain access over time as banks fine-tune the system’s functionality. By Easter, the confirmation of payee service will be fully available for personal banking across all participating banks when making domestic account to account payments."

The service is designed for NZ-based, account-to-account payments. It'll appear in a bank customer's banking app when they add a new payee, make a one-off payment, or edit an existing payee. After entering the account name and number, the service checks these details against the recipient bank’s records. A pop-up then indicates whether there is a match, partial match, or no match.

"If you get a partial match, it’s likely due to a typo or use of initials instead of a full name. A no match suggests the account name may not match the intended recipient. We recommend customers pause and double-check with the person they’re paying to ensure correct account details. Only proceed if you are confident in the match and trust the recipient," says Robertson.