Verification of Payee (VoP) Service

Imagine this: your treasury team is about to release a large supplier payment. Everything looks routine until the IBAN entered belongs to the wrong account holder. Without verification in place, funds could be misdirected, and recovering them could become a long, costly, and frustrating process.

That’s exactly the risk that Verification of Payee (VoP) is designed to prevent. Think of it as a smart checkpoint between “approved” and “transferred.” Before money leaves your account, VoP performs a real-time check to confirm that the beneficiary name matches the IBAN on record at the receiving bank.

It’s like caller ID for payments, you know exactly who’s on the other end before you press send.

Why corporates should care

For corporates, Verification of Payee (VoP) is far more than a box-ticking regulatory exercise. It cuts to the heart of fraud resilience, process efficiency, cash visibility, and partner trust—all of which are strategic priorities for finance leaders today.

• Fraud prevention: Strengthening the first line of defense
  Payment fraud - especially Authorised Push Payment (APP) fraud and Business Email Compromise (BEC) is one of the fastest-growing threats in corporate finance. Criminals exploit speed, human error, and lack of verification to divert funds. VoP introduces a real-time identity check, ensuring that money only flows to the intended beneficiary. For CFOs and treasurers, this means fewer sleepless nights, lower fraud-related losses, and stronger compliance with internal risk policies.

• Error reduction: Protecting against costly inefficiencies
  Manual errors in payee details may seem minor, but they can cause failed payments, reconciliation backlogs, and strained supplier relationships. By validating details upfront, VoP prevents these operational bottlenecks. This translates into smoother AP workflows, fewer exception-handling costs, and improved productivity across finance teams.

• Cash flow protection: Safeguarding liquidity and working capital
  A misdirected payment is not just an operational hiccup, it can freeze significant sums of working capital while the issue is investigated and resolved. For corporates managing complex multi-entity liquidity structures, this creates unnecessary volatility in cash positions. VoP helps protect liquidity by ensuring funds flow correctly the first time, keeping cash predictable, accessible, and strategically deployable.

• Supplier trust: Reinforcing credibility and business relationships
  In today’s supply chains, trust and reliability are competitive advantages. A supplier paid correctly, on time, and without dispute is more likely to extend favorable terms, prioritize your orders, and view your organization as a dependable partner. By leveraging VoP, corporates not only reduce friction but also signal professionalism and control—strengthening their reputation across supplier ecosystems.

This version frames VoP not just as a safety measure, but as a strategic enabler for finance leaders — tying it to fraud resilience, efficiency, liquidity, and reputation.

The regulatory driver: EU Instant Payments Regulation (IPR)

The March 2024 EU Instant Payments Regulation makes VoP mandatory across SEPA. By 9 October 2025, all PSPs (banks, payment institutions, and e-money institutions) must offer VoP for SEPA Credit Transfers (SCTs) and SEPA Instant Credit Transfers (SCT Inst).

Key requirements include:

• Free for corporates: VoP must be provided at no extra cost.

• Mandatory for single payments: Applies to both instant and regular SEPA payments.

• Optional for bulk payments: Corporates can choose to opt out for batch runs, such as payroll or supplier files.

• Liability shift: If your team overrides a mismatch warning, liability may transfer to you.

This isn’t just compliance. It’s a strategic opportunity to improve payment data quality, tighten controls, and future-proof operations.

Operational expectations: what’s changing in practice

The regulation and EPC rulebook set high operational standards that corporates should understand:

• Speed: VoP must be completed within five seconds (ideally one). Payments won’t wait.

• Always-on: VoP services must run 24/7, reflecting the nonstop nature of instant payments.

• Match outcomes: You’ll see three possible results: Match, Close Match, or No Match. Each requires a clear response from your team.

• Directory services: A new EPC Directory Service will ensure interoperability between thousands of PSPs, creating consistency across borders. 

How the VoP process works

What this means for corporate treasury teams

Unlike PSPs, corporates don’t need to implement the VoP service themselves but you do need to adapt your processes and data to ensure smooth  payments once banks switch on VoP.

Key actions for corporates:

1. Clean your vendor master data
   Ensure names in ERP, TMS, and AP systems match exactly as they’re registered at banks. Remove titles, extra spaces, and special characters.

2. Engage with suppliers
   Ask vendors to use official, bank-registered names on invoices to avoid mismatches.

3. Define escalation rules
   Decide how your team should respond to Close Match or No Match results to prevent bottlenecks in urgent payments.

4. Talk to your banks
   Confirm how they will implement VoP, what their “close match” rules look like, and how they’ll notify you of mismatches.

5. Train your teams
   Make sure AP, treasury, and shared service center staff understand VoP outcomes and the importance of clean data.

Strategic benefits for corporates

Preparing early is more than risk management, it unlocks long-term advantages:

• Fewer failed payments → Reduced reconciliation effort and dispute handling.

• Improved fraud resilience → Stronger defenses against scams.

• Better supplier relationships → Fewer payment disputes, faster trust-building.

• Regulatory alignment → Staying ahead of compliance deadlines avoids last-minute disruption.

Conclusion

With the October 2025 deadline fast approaching, payment service providers across Europe are racing to get ready for the EU’s Verification of Payee (VoP) rules. This isn’t just about ticking a compliance box, it’s about making payments safer by checking, in real time and around the clock, that the account name and IBAN actually match. More than 3,000 banks and PSPs have to switch this on at the same time, which makes early preparation and smart integration essential. Done right, VoP won’t just reduce fraud, it will build trust, speed up cross-border payments, and strengthen the foundations of Europe’s digital economy.

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