Mandatory name-number-check at money transfer?


Through the increase of modern technologies our payments are processed electronically more and more. Banks try to reduce costs and force their customers to carry out the payments themselves. Internet banking has become the standard. Customers no longer can deliver written transfer orders at their bank, but have to book the transfers using internet banking facilities.People can easily make a typing error in the account number that still will result in an existing account number. The risks are fully on the customer’s side. Although banks always are willing to help them to get the money returned, it’s better to avoid these errors.

In my opinion, banks should be obliged to perform a name-number-check for every payment or at least for every larger amount.

Recently in the Netherlands someone intended to transfer 43.000 euros to his son but made a typing error in the account number and transferred the money to someone else (see this in article in Dutch). This caused a lot of problems, since the (unintended) recipient spent the money directly and was not willing to pay it back.

The best solution would be to check name and number before the money is transferred. On the other hand, only the bank of the receiver knows these details, so the easiest solution is to perform the check before the money is added to the account. The technology for the name-number-check is an on-the-fly matching, based on fault tolerant identification. The rules should not be too strict since it might happen that e.g. initials are not completely the same.

The following examples could be the result of fault tolerant matching technology:

Transfer information Account information Result
J.H. Johnson11 High StreetLondon J. Johnson11 High StreetLondon Correct
J.H. Johnson11 High StreetLondon L. Johnson11 High StreetLondon Not correct
J.H. Johnson11 High StreetLondon J. Johnson13 High StreetLondon Not correct

The rules should be configurable to meet every bank’s requirements. In the examples mentioned initials and house number have been indicated as important differences. It might be that this is not in all cases the required setting.

Finally, an on-the-fly data matching for name-number-check doesn’t require a lot of processing time if the right technology is used and avoids a lot of problems.

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