Enhanced Payee Verification Enhances Bank Customers' Security
The European Union is taking a significant step towards enhancing the security of cross-border payments within the continent by introducing the Verification of Payee (VoP) service. This fraud-prevention measure, part of EU regulation EU 2024/886, aims to reduce payment fraud, misdirected payments, and increase trust in real-time payment transactions.
Key features of the EU VoP include real-time matching of payee account names with IBANs, feedback to payers with results such as 'Match', 'Close Match', or 'No Match', and a critical trust layer for Europe's instant payments ecosystem that supports regulatory compliance and fraud reduction. The service will integrate with upcoming regulations like the Instant Payments Regulation (IPR), PSD3, and the SEPA Instant payment scheme.
Starting from October 9, 2025, EU banks and payment service providers will be required to be VoP-compliant. This means that when initiating a payment, payers will see real-time verification results to ensure the intended payee details match, significantly reducing fraud risks associated with payments across the Single Euro Payments Area (SEPA).
The SEPA area, which includes 27 EU member states, the United Kingdom, Norway, Liechtenstein, Iceland, Switzerland, Monaco, Andorra, Vatican City, and San Marino, aims to accelerate cross-border payments, direct debits, and card payments. However, recipient verification is not planned for transfers to and from the United Kingdom and Switzerland.
Ingo Beyritz, head of payments at the Association of German Banks (BdB), stated that they do not expect any problems with the implementation. He also mentioned that just looking at data received via invoice or email may not indicate whether the data is clean. Data transparency checks before payment, according to Beyritz, will help ensure the data's integrity.
Crucially, neither payers nor payment recipients will pay for recipient verification, as stated by the BdB. This means that the new service of recipient verification should not result in additional fees for customers, according to the European Union's guidelines.
This rollout represents a significant step in creating a more secure and resilient European payments ecosystem. With the EU VoP, the continent is moving towards a future where payments are not only faster but also more secure, reducing the risk of fraud and increasing trust between payers and payees.
The finance business sector in the European Union will benefit from the integration of the Verification of Payee (VoP) service, a technology-driven fraud-prevention measure, in line with EU regulation EU 2024/886. As part of the SEPA area, banks and payment service providers will be required to follow VoP compliance from October 9, 2025, ensuring a more secure cross-border payments ecosystem by verifying payee details in real-time, thereby reducing business risks associated with finance transactions.
