From May, payments and bank transfers in Portugal will undergo significant changes, bringing new measures to reinforce the safety of financial operations. The changes, which result from rules imposed by Banco de Portugal (BDP) and a European regulation, aim to reduce bank fraud and make processes more transparent to users.
Recipient identification in payments
On May 19, a new functionality in bank payments will be effective that will allow you to view the recipient’s name. So far, some services have concealed this information, making it difficult to identify those who received the values transferred. With this measure, it is intended to increase transparency and hinder fraudulent schemes.
Banco de Portugal measures
According to the BDP decision was announced in November and underwent a public consultation period before being adopted by banks and other financial institutions. The measure arises following another mechanism implemented in May last year, which introduced the confirmation of the account holder associated with an IBAN at the time of transfer.
Impact of beneficiary confirmation
Thanks to the beneficiary confirmation, users were able to check the name of the first account holder before completing a transfer. Since its implementation, this functionality has been consulted 112 million times until March 5 this year, according to BDP data.
Reduction of Bank Fraud
The introduction of this mechanism had a significant impact on reducing bank fraud. Between May and August last year, the number of reported cases fell 78%, and the total amount involved in fraudulent transfers registered a decrease of 61%.
Fraud Regulator Data
The numbers revealed by the regulator indicate that, before the application of the beneficiary confirmation, the recipient’s manipulation fraud reached a monthly average of 766 thousand euros. With the entry into force of the new system, this amount dropped to 441 thousand euros between June and August.
Safety reinforcement at European level
The security of bank transfers will also be reinforced at European level. From October 9, operations to other European Union countries will have a beneficiary verification system, which follows a different model from that applied in Portugal.
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Differences between the national and European system
Contrary to the national mechanism, which displays the name of the first holder of the bank account, the European solution will require the sender to introduce the recipient’s name when making a transfer. This name will be automatically compared to the receiving account holder.
Functioning of the new algorithm
The verification will be done through an algorithm that measures the similarity between the two names. When there is an exact correspondence, the operation may proceed normally. If the name introduced is only approximate, the system will alert the user to the discrepancy, allowing him to decide whether or not to advance the transaction.
Alerts for correspondence errors
If there is no correspondence between the names, the user will be informed that there is an error in the information provided. Thus, this mechanism aims to reduce the risk of transfer to wrong recipients or to accounts used in fraudulent schemes.
Coexistence of both systems
The application of this European regulation will not replace the system currently in force in Portugal. Both solutions will coexist, offering users additional security layers in bank transfers.
Advantages for users
With these changes, both nationally and European, banking operations become safer and more transparent. Users have more tools to avoid wrong or fraudulent transfers.
Adaptation of banking institutions
Banco de Portugal stresses that these measures are part of continuous effort to reduce financial fraud. Bank institutions are also adapting their systems to ensure effective implementation of these new rules.
Importance of users’ attention
Given the positive impact of the beneficiary’s confirmation in the last year, it is expected that the new functionality of identification of the recipient will bring additional benefits to the security of bank customers. Users should, however, continue to be aware and always check the data before performing any financial operation.
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