AP+ spills details on ‘Confirmation of Payee’ rollout

Confirmation of Payee system

Australian Payments Plus (AP+) has unveiled its development roadmap for the banking sector’s ‘Confirmation of Payee’ system, announced late last week as part of a raft of new capabilities and rules to be established under the banking industry’s Scam Accord.

After “a series of design workshops and consultations” with NPP participants, among which include Australia’s major banks, AP+, the member-owned payments system coordinator, said that it had resolved a technical design for the Confirmation of Payee solution.

The recommended solution, AP+ said, involves using confirmed BSB and account number data with either payee name display or account name matching being presented to the payer.

This service would be delivered using New Payments Platform (NPP) infrastructure, which underlies Australia’s fast payment rails, standardised APIs and a centralised account-matching service managed by AP+.

AP+ said the solution would also seek to leverage additional payment and account data (derived from other financial institutions or potentially third parties about potential scam accounts) which could be incorporated into fraud mitigation strategies and risk assessment by participating financial institutions.

The ‘Confirmation of Payee’ system is part of the industry’s recently confirmed Scam Accord, with the banking sector collectively committing $100 million to build and deploy the new anti-fraud payments protection system.

The system is aimed at protecting customers from misdirecting payments, enabling individuals to confirm they are transferring money to the person they intend (and not a potential scammer).

Such a system, the banks said, would “[mitigate] the possibility of people being manipulated into paying a scammer when the name does not match”.

Based on consultations with participants, AP+ mooted plans for a “phased delivery approach”.

“This approach would give those organisations the option to deliver a solution to their payer customers according to their preferences and individual organisational readiness. The target-state solution will include [the] use of confirmed data which could be optionally augmented by other data sources.”

Roadmap for deployment

AP+ confirmed it will commence a detailed design phase of work next month.

The payments body said it would engage with a vendor in parallel to begin work on developing the payee protection capability. The final capability is expected to be delivered, in phases, by the end of 2024.

“During 2024, once the first phases of capability are likely to be delivered (including API connectivity leveraging existing NPP Payment Gateways), financial institutions could look to integrate to the service to support Confirmation of Payee for their account holders and provide Confirmation of Payee services within their banking channels,” AP+ said.

This includes leveraging observed data as an interim approach (in the absence of confirmed account data) to support FSIs that would make use of observed data sources through 2024 for Confirmation of Payee.

Later in 2024, an additional capability will be made available to NPP Participants to support centralised matching of information entered by payers, with account data held by payee banks and results displayed to payers.

Additional data could continue to be leveraged for broader insights that could be used for fraud mitigation and risk assessment purposes.