Under the ‘Confirmation of Payee’ service, an extra layer of protection will be added to online money transfers.

Currently, an account name isn’t checked when customers send electronic payments. As such, fraudsters have tricked people into sending money to the wrong account.

But retail payment authority Pay.UK said the service will help prevent fraudulent payments being made in the first place.

When sending money to a new contact or amending an existing one, banks will check the name of the person or organisation you’re trying to pay. There will be three possible outcomes:

• Yes: If you used the correct account name, you’ll receive confirmation that the details match, and can proceed with the payment.
• No, please check: If you used a similar name to the account holder, you’ll be provided with the actual name of the account holder to check. You can update the details and try again, or contact the intended recipient to check the details.
• No, the name is wrong: If you’ve entered the wrong name for the account holder, you’ll be told the details do not match and advised to contact the person or organisation you’re trying to pay.

Banks, building societies, and other payment providers will be able to roll out Confirmation of Payee during 2019.

However, the new service won’t help rid the blight of ‘purchase scams’ where someone is tricked into paying in advance for goods that don’t exist.

Paul Horlock, chief executive of Pay.UK, said: “Sending a payment with an incorrect sort code or account number is like addressing a letter with the wrong post code. Even if you have used the correct name it won’t reach the intended destination – and fraudsters have become increasingly sophisticated in using this to trick people into sending money to the wrong account.

“Confirmation of Payee will let you check you have the correct name for the person or business you’re paying, giving better protection against certain types of fraud, and helping to stop accidental mistakes too.”