New payments process may cause issues for sole traders selling online
This week major banks introduced confirmation of payee checks which means that as well as checking the sort code and account number when processing payments online, they will now also be checking the account name.
This is a step towards reducing fraud and incorrect payments being sent. It does however, present an issue for some sole traders selling online. Whilst the changes have been known about since 2018, it appears some merchant providers may not be up to date with the new process.
Most merchants will require a sole trader to set up a personal account due to lack of a company number that would be the case for a Limited Company or similar. Most of these sole traders will also have a business bank account which is under their trading name. Currently the account name field for some merchants has just been populated from the actual name of the client and not the business. Up until now, that has not been an issue as the account name wasn't checked however, with the new confirmation of payee checks it means many sole trader businesses have or will receive an error confirming their payouts from some merchant providers this week. Some merchants are looking into this and hopefully a solution will be found soon.