The Royal Bank of Scotlandis planning
to roll out a debit card payment system that will bring
sophisticatedtechnology to cut errors and
fraud from debit payments.
The Royal Bank of Scotland (RBS) is the first to use a system
for debit card payments which automatically verifies details such
as the addresses of both parties and checks whether the payments
follow a usual pattern. The project aims to cut fraud and mistakes
which cost businesses billions of pounds a year.
Jane Barber, head of product development at RBS, said the bank
is looking across its entire business to decide where to deploy the
system. "Because we are a big business with a lot of core services,
it is intellectually challenging to decide where to put it."
RBS plans to use the
Banking Wizard
Absolute service from Experian Payments, formerly Eiger
Systems. The system uses information from Experian's information
business to check the authenticity of bank accounts and to verify
that the person making a debit payment is who they say they
are.
The project aims to cut the costs associated with payment
failures. "Business customers want to process payments quickly and
easily but everytime something goes wrong it makes it difficult,"
said Barber.
According to the UK trade association for payments, Apacs, 2% of
direct debits and direct credits, equivalent to 111 million
transactions, fail each year. The cost of resolving failed debit
payments is estimated to be as much as £35 per transaction or £3bn
annually, according to research from Experian.
Traditional payment systems used by banks automatically check
the bank account numbers and sort codes against databases to verify
they are genuine numbers. But they do not verify the details of the
individual making the payment - such as address and details of
previous payment - which could make errors and fraud less
likely.
"This is typical across the banking sector," said Gareth Lodge,
analyst at TowerGroup. "As far as I know, no UK bank has a system
that can do this because none has existed before."
Lodge said installing the software across the business will give
RBS a single view which will help it spot frauds. "For example if
somebody tries to commit fraud at its insurance division,
transactions will be automatically blocked at its other
divisions."
The Experian system is web-based and has a single interface so
the bank will only have to implement the software once. RBS will
pay for the service on a transactional basis with Experian Payments
receiving a payment whenever a transaction is made.
Barber said the arrival of the
single European payments area in January and the Faster
Payments System next month means payment security is vital as
payments systems will be increasingly targeted by fraudsters.