Amid the concerning prevalence of payment-based fraud, LHV UK has incorporated a dynamic solution into its system that is set to safeguard its direct clients from every angle of attack.
Serving in excess of 200 prominent fintech and crypto companies, the banking services provider’s Confirmation of Payee (CoP) service, the most advanced development of its offering to date, is now officially live.
The newly-incorporated service, which has sat upon the system of Pay.UK since its creation back in July 2020, is essentially a complex fraud prevention system operated with open banking.
For all of the strides that fintech has made, of which there have been many, the manual process of transferring money from one person to another is plagued by the potential for fraud. Names and numbers are prone to error, especially so in the long format familiar with banking details.
What the CoP does is authenticates the recipient’s details against those held by the corresponding bank, prior to the digits leaving the host’s account.
If, for instance, the details were faulty, the host is alerted instantly to the presence of a red flag. CoP supports payments to UK local accounts and checks the payee details when using Faster Payment and CHAPS systems or when establishing a standing order.
It’s crucial that players like LHV UK are adopting this form of security now, especially so since cases of authorised push payment (APP) fraud, when a consumer or a business gets tricked into approving a payment to a fraudster’s account, are on the rise.
LHV UK has stated that it plans to implement the CoP in two stages. Currently, other participants can check the names on the company’s customer’s accounts matches their details. More functionality will be added in the future, and LHV UK’s customers can check payee details for outbound transactions when making a payment.
The problem of APP has become so pronounced, that during the Queen’s speech, at the beginning of May, the UK government introduced the UK’s Financial Services and Markets Bill, which would grant the UK regulators the power to force banks to reimburse the victims of APP fraud, scrapping the current voluntary approach, which was set up in May 2019.
While this improved compensation levels for the victims, the government said that the way it was applied is inconsistent, and the level of compensation varies significantly between banks.
“According to the UK Finance, fraud is now the most common crime in the UK. In the first half of 2021, cases of APP rose by 71 per cent compared to the same period the year before and, for the first time, overtook card fraud in terms of the amount of money stolen,” comments LHV UK CEO Erki Kilu.
“With regulators poised to get the power to force banks to reimburse the victims of APP fraud, CoP provides our clients and their end customers with an extra layer of defense against APP fraud and greater assurance that their payments are going to the right recipient.”
The implementation of CoP marks yet another positive step for the bank, having launched its second UK base in Leeds just last month. In addition to its expanded footprint, the bank is also deep in the process of applying for its UK banking license; something it hopes to complete close to the beginning of next year.