Brits told to use payment reference when paying bills online or over the phone

In addition to the advice to payers, the Payments Council also published 'Best Practice Guidelines for Billers' which covers a number of interesting points around receiving consumer payments made from remote banking systems; it advises on bill formats, how to help to customers and suggestions for automated reconciliation systems. This, and its sister guides for Payers and Banks are a great step forward, making clear the importance of good payments data to drive up levels of efficiency and customer service.

According to the Payments Council statistics, internet banking is now used by over 22.4 million people in the UK and almost 15 million use it to pay bills. The advice for billers, and separately for payers, given by the Payments Council is indeed valuable and will help reduce the confusion that consumers can find when trying to identify payment details on bills. If the UK is to guarantee prompt and efficient payments from remote banking systems then billers - as well as payers - require the accurate input of payment details. This includes the correct name of the biller, their bank details and the biller's customer's unique reference number, i.e. the account number, bill number or customer reference number. Research done by the Payments Council has shown that the entry of these key fields by users is prone to error.

However education is only one part of the puzzle. The key to effectively conducting bill payments first and foremost is validation of the biller's and payer's payment details. This requires provision of the sort code and bank account number based on the name of the biller or brand and checking whether the customer reference number is in the correct format and passes any integrity rules such as a modulus check. Furthermore, as billers change their banking provider and therefore the destination account, these payments can be mis-directed; without a system to route them effectively the impact on the efficiency of the collections and customer service processes can be significant.

With more and more businesses and customers choosing to pay their bills online, getting the payment data right will be the bedrock of best practice and enable billers to reap the full benefits of today's more-connected age.

There is in fact a feature within Faster Payments that would greatly reduce the number of misplaced bill payments whereby the receiving company could sit in on the transaction flow and accept or reject the payment. This way if the customer omitted or miss-keyed the reference data required the receiving company could reject the payment and therefore not have the manual effort and bad customer experience of chasing up bad debt that has in fact been paid. The other added benefit is the receiving company would get real-time information on customers paying them.

Honestly, the issues I faced with the money transfer and bill payment functionality on two leading UK banks' Internet Banking portals were too fundamental to be addressed by the somewhat generic recommendations issued by the Payments Council. For example

(1) The length of the given reference field on the money transfer screen of one of the banks was too short to accommodate the minimum size of reference that the payee would need for making any sense of the payment. 

(2) In the case of my utility bill, even though I could enter the name, account number and sort code provided by my utility company into the given fields of both banks' screens, one bank blocked this transaction, instead directing me to use the bill payment feature from where I had to select the beneficiary name from a certain drop down list. Unfortunately, none of the available names matched my utility company's name ("EDF ENERGY")! What options did I find in the drop down list? There was EDF ENERGY ELEC and EDF ENERG LONDON. Well, I was living in LONDON and was trying to pay my ELECTRICTY bill, so do I select EDF ENERGY ELEC or EDF ENERG LONDON? Since I didn't have an answer to this question and didn't want to risk paying one company for the electricity supplied by another, I gave up trying to make this payment on the bank's website.

I wish the Payments Council uses its clout as a central industry body to direct member banks to adopt some sort of uniform naming standards so that customers - both payers and payees - can have a frictionless experience with online fund transfers and bill payments.

I understand the frustration you have with online bill payments. Some of the issues are related to the clearing system in that Bacs will not convey more than 18 characters from a restricted set which is acceptable for an automated reference, but not for a narrative.

The other issue you mention -of being able to select the provider straightforwardly - is one we know well. Experian has provided for almost a decade a service for banks and banking providers to allow them to offer a simple means to find their biller. In many cases this means being able to route the payment to a different collection account depending on the range of the customer account number. For example when one business acquires another the biller's brand may change but the collection details may stay the same for some unspecified period of time. This leads to the sort of confusion where there are multiple entries depending on whose customer the consumer was originally.

Consumers want their payments to work every time and the bill payment mechanism they used last month or last year to work every time and be directed to the right account. We maintain the only commercially -available service for almost 2000 biller brands to ensure this information is correct and validate, where possible, the reference number for format and integrity.

Until consumers can have as much confidence in online banking payments reaching the right destination as they have in Direct Debits, some will still rely on sending cheques or accept the level of failure that the current systems provide.