Dutch banks introduce innovative IBAN-Name Check

Source: Dutch Payments Association

In order to serve their customers even better, Dutch banks will introduce the IBAN-Name Check in the course of 2017. This innovative internet and mobile banking service checks the name of the beneficiary entered by the customer before a credit transfer is executed. The check helps bank customers to protect themselves against fraud with account numbers and to avoid incorrect transfers.

 

Rabobank developed the IBAN-Name Check last year within the framework of its own innovation programme. Rabobank will introduce the check in the second quarter of 2017. Other banks will follow.

Prevention of fraud and incorrect transfers

Billions of payments are processed quickly and efficiently  by Dutch banks each year. Problems sometimes occur, however, as a result of customer errors. Around 1,300 incorrect transfers per month are reported to banks. Three quarters of those transfers result from errors made by customers and the use of reissued old account numbers. And bank customers report more than 200 cases of incorrect transfers per month, due to fraud.

The Dutch banks have agreed on three measures that help customers avoid transfer errors and fraud. These measures have already been introduced or will be introduced in 2017:

  • Banks will stop reissuing IBAN account numbers of closed accounts
  • Banks will encourage their customers to check and update their address books for internet and mobile banking
  • Banks will introduce the IBAN-Name Check for internet and mobile banking

How the IBAN-Name Check works

When an internet or mobile banking user has entered the IBAN and name of the beneficiary, the name is checked before the transfer is executed. If the check reveals any errors, the user will receive a warning:

  • The entered name is slightly different from the one known for the account number. The known name is shown to the user for verification.
  • The entered name is very different from the one known for the account number. The known name is not shown and the user is warned about the possibility of error or fraud.

Customers remain responsible for how they respond to the warning. As a result of European legislation, the IBAN is the unique identifier used for routing the payment. The beneficiary name is not relevant for the actual transfer. If the entered name is correct, the user will not receive a notification.

The IBAN-Name Check currently only works with Dutch IBANs. If a (foreign) IBAN cannot be checked, the customer will receive a notification about this.

Smart algorithms and new technologies

It is now possible to check the name linked to an account number using new technologies and smart algorithms without causing a delay in handling the payment and without violating the privacy of account holders. The customer maintains control.

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