Together with the New Zealand Banking Association, New Zealand’s retail banks are working towards a new Confirmation of Payee system, which is one way they aim to reduce the number of payments made to fraudulent bank accounts and help people avoid making payments to the wrong account.
In its own submission, the NZ Bankers Association, representing the major banks, said the increase in capital requirements were “a significant factor” in interest rates being higher on average for farm loans than for residential mortgages.
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“Rolling out confirmation-of-payee is not as simple as flicking a switch. Broadly speaking there are two main phases involved. First, we need to build a solution and ensure it works technically with our current payments system and complies with banks’ privacy and confidentiality obligations. Once we have that, banks then individually need to implement changes to their own systems to make the solution available to their customers, and that includes designing, building, and rolling out updates to their apps and online banking platforms.“
The New Zealand banking sector says it now has a preferred provider for setting up confirmation of payee, a key part of its response to the burgeoning problem of scams.
Beaumont said there was also a role for telecommunications companies, social media websites and search engines in helping combat scams. “To take the centre to the next level, we’ve asked the government for operational support by involving the police and other relevant agencies.”
“This is something that takes time, it has been progressed since we announced that in September – and we’re moving at that pace.”
New Zealand’s retail banks are on track to start rolling out a confirmation of payee service by the end of the year, says the New Zealand Banking Association.
“We’ve just completed a competitive selection process and now have a preferred provider for the service. We won’t be able to announce the name of that provider until we’ve finalised the contractual arrangements,” says New Zealand Banking Association chief executive Roger Beaumont.
“In line with our previously announced commitment, we’re on track to start rolling this out by the end of the year.”
‘Confirmation of payee’ will help people making an online payment from one bank account to another to check whether they’re paying the right account and may help identify payments to scammers. It will also help people avoid making mistaken payments to the wrong account.
When a customer makes a payment they currently need to enter the recipient’s name and account number. Once it’s available, confirmation of payee will compare the name a customer has put into their payment details against the actual name registered against the account number and indicate whether that name matches or not.
It is then up to the customer to decide whether to proceed with a payment after they receive this notification.
In addition to confirmation of payee, banks are also:
- Supporting an Anti-Scam Centre, initially targeting mule accounts used by criminals to move stolen money
- Removing hyperlinks from texts to customers
- Raising public awareness about scams.
“Banks are encouraging other sectors involved in the scam ecosystem to do more to prevent scams where they can. Scams typically start when people are deceived by fake websites, emails, texts, social media ads, and phone calls, so there’s a role for telcos, social media companies, and search engines to help stop them in the first place. They’re able to intervene in areas outside banks’ control.
“There’s also a role for government. Banks have got phase one of the Anti-Scam Centre off the ground by identifying and sharing more information faster on mule bank accounts, which are used by criminals to move stolen money. To take the centre to the next level, we’ve asked the government for operational support by involving the police and other relevant agencies. We’ve also asked them to set scam prevention expectations for other industries.”
On the next steps for confirmation of payee, Beaumont says: “Having identified a confirmation of payee solution, we now need to do the technical build for our payments system and ensure it complies with banks’ customer privacy and confidentiality obligations. Banks will also need to build and implement relevant changes, including to their online banking and mobile app platforms.
“Confirmation of payee won’t be a silver bullet in the war on scams. This solution is part of a suite of anti-scam initiatives being implemented by retail banks. Scams are increasingly sophisticated and require a layered approach to prevent them and protect consumers.”
ENDS
The New Zealand Banking Association (NZBA) also welcomed the changes, with chief executive Roger Beaumont highlight that the changes would allow banks to exercise flexibility and discretion to better meet customers’ needs, especially in emergency situations.