Digital payments: Navigating the landscape, addressing fraud, and charting the future with Confirmation of Payee solutions

This paper explores the evolving landscape of digital payments, with a specific focus on the confirmation of payee (CoP) mechanism, which has been designed to enhance the accuracy and security of payee identification. Traditional payee identification methods, reliant solely on account numbers, face increasing limitations amid the growing sophistication of both domestic and cross-border payments. The rise of instant payments and their associated fraud risks underscore the urgent need for more reliable payee identification systems. Drawing insights from domestic markets where CoP has been implemented, this paper presents the challenges, regulatory responses and the potential of a CoP scheme for Europe and globally. We argue that while a singular European solution is unlikely, interoperability will be the key to success. The paper concludes by envisioning the future of payee identification, exploring the global potential of CoP, and urging the industry to perceive CoP solutions as public goods of benefit to all stakeholders in the payments sector.