With 42% of financial institutions seeing an increase in fraud in 2024 and digital payments becoming the norm, ensuring that money reaches the right account when a payment is sent is more important than ever. That’s why the European Payments Council (EPC) has introduced Verification Of Payee (VOP), a scheme designed to reduce fraud and misdirected payments across the EU.
With the EU’s first VOP rulebook published in October 2024, banks and payment service providers (PSP) offering instant payments in single euro payments area (SEPA) must now comply. The deadline is approaching, so preparation is key.
So, what exactly is VOP, why does it matter, and what do banks and PSPs need to do to comply? Let’s dive in.
What is Verification Of Payee?
VOP is a fraud prevention and security measure that ensures a payment is being sent to the correct person or business by verifying the payee’s details before the transaction is processed.
Similar to Confirmation of Payee (CoP) in the UK, the EU scheme enforces that checks are made before a payment can be sent from one account to another. With VOP there’s a check to confirm that the payee name matches with the account details, like account number, to reduce the risk of a payment going to the wrong person. The VOP scheme was developed to comply with legal obligations stemming from the EU Instant Payments Regulation (IPR).
How does Verification Of Payee Work?
Following the new regulatory requirements, when a person or business initiates a transaction, there will now be a mandatory verification process. The VoP scheme allows the payer’s PSP to verify if the IBAN and payee name match the records held by the payee’s PSP, and will return one of the following responses:
Match – The details are correct, and the payment can proceed.
No Match – The details do not match the recipient’s account information.
Close Match – Some details are similar but not exact, prompting the payer to review the information.
If a ‘no match’ or ‘close match’ response is received, the payer can decide whether to proceed with caution, correct the details, or contact the recipient before completing the transaction.
Why is Verification Of Payee Important?
1. Reducing payment fraud
Fraudsters are increasingly tricking individuals and businesses into sending payments to fake or compromised accounts. VOP acts as a security checkpoint, preventing payments from being misdirected to fraudulent accounts.
The UK’s Confirmation of Payee (CoP) scheme, introduced in 2020, has reduced fraud cases by nearly 60%. A similar impact is expected across the EU once VOP is fully implemented.
2. Preventing human error
Mistyped account numbers and incorrect recipient names cause costly mistakes. VOP reduces errors by alerting payers if details are incorrect.
3. Strengthening trust in digital payments
Customers and businesses gain confidence knowing payments undergo verification. This is crucial as instant payments become widespread.
What Key Dates do Banks and PSPs Need to Know?
The timeline for VOP compliance is already underway. If a bank or PSP did not opt out by the 31st January 2025, they must now work towards full implementation. All European Payment Service Providers (PSPs) that provide SEPA payments must offer VoP to their customers starting October 9, 2025.
March 2025 – Opening of adherence process
5th October 2025 – The rulebook comes into effect
9th October 2025 – Implementation deadline for PSPs
Challenges and Considerations for Banks and PSPs
Banks and payment service providers face a choice: build in-house solutions or partner with third parties. Open banking initiatives show that in-house development can be costly and complex as the implementation of the VOP service requires significant changes to the IT infrastructure of PSPs.
Financial institutions must assess the investment required for compliance. They should consider technology integration, operational impacts, and ongoing maintenance. Beyond cost, technical and operational challenges exist. Banks must integrate VOP into existing infrastructure, manage processing times, and train staff in fraud, compliance, and customer service.
With tight deadlines and high costs, many banks may find that partnering with an experienced provider is the most efficient option.
How can Ozone API help?
At Ozone API, we deliver open APIs for banks and financial institutions around the world, from open banking to open finance and Verification Of Payee. Our market-leading platform is trusted by central banks, major global banks, financial institutions and fintechs of all sizes.
Whether it’s complying with VOP, implementing the latest open banking API standards, or a combination of both, we provide everything you need for a quick and simple delivery. Our VOP pricing is clear and transparent, with no hidden charges. We’ve also got a wealth of knowledge and can help your teams navigate what this means for them.
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With the October 2025 deadline fast approaching, banks and PSPs should act now to ensure compliance with the VOP scheme. To get more support on Verification of Payee, get in touch.
