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Home > Finance > How Confirmation of Payee will protect the UK economy post-pandemic

How Confirmation of Payee will protect the UK economy post-pandemic

Published by linker 5

Posted on July 14, 2020

6 min read

Last updated: January 21, 2026

Illustration of payment security measures in banking post-pandemic - Global Banking & Finance Review — An informative visual representation highlighting the importance of Confirmation of Payee in reducing APP fraud for SMEs in the UK. This image relates to how banking technology evolves to combat fraud post-COVID-19.

By Martin Threakall, Chief Product Officer

With fraudsters exploiting the COVID-19 crisis to prey on consumers and SMEs, it’s about time payments technology innovation fought back.

How fraudsters are exploiting the current crisis

Millions of businesses and consumers fall victim to fraud every year across the UK. But for SMEs, the need to be vigilant against fraud has never been more apparent, not least at a time when they need as much cash as possible to survive the economic downturn; Recent data has shown that around £2m has already been stolen from businesses in COVID-19 related scams.

A large proportion of these crimes are categorised as Authorised Push Payment (APP) fraud. This is when an individual as a consumer or acting on behalf of a company is tricked into authorising a legitimate payment to a criminal’s account through manipulation. In times of social crisis, such as with COVID, fraudsters look to exploit the turmoil with convincing, crisis-related scams.

APP fraud causes significant damage for the UK’s SMEs. Last year, approximately £455.8m was lost to this type of fraud, with SMEs losing on average £18,000 per case. But the impact goes much further than just financial losses – relationships between companies, suppliers and partners are damaged, and customer confidence eroded.

As the economy looks to re-start following the COVID-19 lockdown, SMEs will need all the help they can get to maintain strong cashflow and reduce the damaging impact of APP fraud. One answer is Confirmation of Payee (CoP) – which the UK’s six major banking groups are now required to implement. This new initiative will help reduce the risk of fraud, by performing a check to ensure the payment details – sort code and account number – match the payee name on record.

APP fraud is on the rise…

Advances in payments technology have changed how businesses pay suppliers, take payments from customers and pay staff. But regulations have struggled to keep up. While a number of businesses and consumers now take advantage of methods like Faster Payments, which offer a wide range of benefits, users must be wary of mistakes as this payments scheme is irrevocable, meaning it is not possible to reverse funds that have been transferred.

When Faster Payments are processed, only the account number and sort code are matched – there’s no safeguard to ensure that account numbers match with the correct account name. And if a payment is made to the wrong account in error through either mistake or social engineering by criminals, there is no guarantee of getting the funds back.

…And here’s how the industry is fighting back

Introduced this year, by Pay.UK and adopted by FinTechs such as Modulr for outbound payments, Confirmation of Payee is a service that determines whether account names match up to the corresponding account numbers and sort codes. The aim is to give businesses and consumers greater assurance that they are sending payments to a legitimate account.

Take a lender who wants to make a loan disbursement to a new borrower. This lender calls Modulr’s API with the borrower’s account name, account number and sort code. The CoP system then automatically checks that the borrower’s account name and details are the same as those held by their bank.The process will either return:

A match: meaning the user can continue with making the payment.
A close match: whereby the details are similar and a correct name is returned for the user to check. It may be the case that there was a spelling mistake or an abbreviation of a name used. I.e. The payer specified the recipient is a Jen Humphrey, as opposed to the Jennifer Humphrey on file.
No match: where the name does not match the sort code or account number.

Occasionally, the system may be unable to verify the account name, usually because the recipient’s bank account is not yet involved. Though this should lessen quickly as more banks and financial institutions join the system.

With this insight, users will be able to make more informed decisions when processing payments. Though it is important to note that CoP is only a recommendation and users will still be able to proceed with payment regardless of the result.

Supporting the economy post-pandemic

Businesses stand to gain significantly from CoP and the protection it provides against APP fraud for a number of reasons.

Firstly, it will help reduce the risk of direct financial losses, as businesses are less likely to transfer payment to a fraudulent party. Businesses that were victims of fraud lost on average £18,000 each last year – money that is difficult to get back. As many SMEs struggle to stay afloat in the coming months post-lockdown, it will be important to mitigate as many financial losses as possible.

Added to this, CoP will reduce the amount of time SMEs need to spend on fraud resolution. This is often a time-consuming and expensive process which involves numerous entities. Often businesses have to persuade the bank and the recipient bank to recall the money, and there is no guarantee of success. CoP will give much-needed time back to pressured businesses so they can focus on recovering trading to pre-pandemic levels.

Further, often when a payment is sent to criminals, it means a legitimate recipient – either a consumer or supplier – is left short and waiting to receive funds. CoP provides greater assurance that customer payments will make it to the correct recipient. This in turn will enable SMEs to build strong relationships with their customers and increase their customer experience.

While CoP will benefit any business that processes payments, there are certain industries where it will have a more significant impact. Lending in particular is a prime target for fraud, and lenders have to be extra vigilant. It is common for fraudsters to submit a loan request in another’s name but have the loan distributed into their personal account. CoP will enable lenders to catch this type of fraud before funds are disbursed.

Neobanks and alternative banks also stand to benefit from CoP. They need to protect customers from falling foul of APP fraud. With CoP, neobanks can catch this type of fraud, preventing damage to their brand.

Conclusion – CoP is a welcome sight for post-pandemic Britain

With the businesses needing as much support as possible to help the economy get back on its feet, and APP fraud on the rise, the introduction of CoP could not have come at a better time.

By providing an additional layer of friction when making payments, it slows the process down and will significantly help reduce the amount of money lost by both businesses and companies to APP fraud each year. Added to this the time SMEs will get back from spending on fraud resolution and the ability to increase customer experience. And it is clear that CoP will greatly support the economy as we move beyond the impact of the coronavirus pandemic.