Banco de Portugal expects less fraud in transfers using mobile phone numbers

Banco de Portugal believes fraud should be reduced thanks to a feature that, from Monday, will allow transfers to be made by simply entering the recipient’s mobile phone number.

At a press conference in Lisbon, Banco de Portugal administrator Helder Rosalino said that transfer fraud, despite its relatively low level, creates social anxiety and compromises the security of the payment system, so he believed that functionality called SPIN would improve security and help reduce fraud.

“The social engineering of ‘hey father’ or ‘hey mother’ clearly reduces the likelihood of success, because if I think I’m passing it on to my son and his name doesn’t come up, then I have doubts and don’t make the transfer,” – he said. Elder Rosalino presents the SPIN system to journalists.

The SPIN functionality will be rolled out gradually and could happen before September, with the Bank of Portugal saying 14 banks will receive it on Monday.

In the first half of 2023, according to the latest data, losses from fraud in the payment system amounted to 1.8 million euros, which is equivalent to six frauds for every million transfers. Although the fraud rate is low, BdP indicates an increase compared to 2021 (fraud rate was 0.003% in the first quarter of 2021 and increased to 0.006% in the first quarter of 2023).

Banks cannot charge a fee for this new feature, and there are no limits on monthly transfers or cash beyond those determined by the bank (many customers have transfer limits, such as €5,000, and for amounts above they need to contact the bank).

In other words, from Monday what already happens on the MB Way network (from SIBS) – where all you have to do is enter a phone number (with the corresponding bank account number) to transfer money – will now happen on all transfers between national accounts carried out through Homebanking, the bank’s application or through the cash register.

However, in MB Way, the transfer occurs exactly at the moment when it was made, and the one who receives the money immediately notices it. With this feature, as with any transfer before this date, the customer must select the “immediate transfer” option (which costs more than a traditional regular transfer, which is technically called a “credit transfer” and takes one day).

But it should only be a matter of time before all funds are transferred immediately. This is due to a European legal obligation from next year (9 January) that banks cannot charge more for immediate transfers than for regular transfers, so it is expected that from now on customers will prefer immediate transfers due to their convenience.

The functionality also applies to companies, just specify the NIPC (Company Taxpayer Identifier).

SPIN only exists for Portuguese accounts, but the Bank of Portugal said discussions were underway in the European Union to create a similar European mechanism.

Another functionality has recently become available. From May 20, all transfers between Portuguese accounts have confirmation of the recipient. The name of the person or entity who will receive the money appears on any channel to verify identity before the final transfer order is given.

“These features are not intended to change the functioning of the market and are not intended to compete with the AB or C solution and are available across all banks across all channels. This universalizes two main functions: confirming the beneficiary and reducing the complexity of identifying the beneficiary,” Elder Rosalino said in response to reporters.

In total, Banco de Portugal invested about 600 thousand euros in these systems, considering the administrator that “the return is significant for society, for citizens.”