Imagine this: your corporate treasury team is about to release a large payment to a trusted supplier. Everything seems routine - until it turns out the IBAN entered actually belongs to a completely different account holder. Without any verification in place, those funds could be sent to the wrong beneficiary, and recovering them could become a long, costly, and frustrating process.
That’s exactly the type of risk that Verification of Payee (VoP) is designed to prevent. Think of it as a smart checkpoint between “approved” and “transferred.” Before the payment even leaves your account, VoP runs a real-time check to confirm that the name you’ve entered matches the IBAN’s actual account holder.
It’s a bit like caller ID for payments—you’re not just sending money into the void; you can see who’s on the receiving end before you commit to sending it.
VoP is a pre-payment matching system. When you enter a payee’s details, the system instantly verifies if the name and IBAN correspond to what’s on record at the receiving bank. If something doesn’t add up, you get a warning—giving you the chance to double-check before any money moves.
This extra step may feel small, but it’s a big deal when it comes to avoiding:
Fraud: Preventing scammers from tricking you into paying the wrong account.
Human error: Catching typos or mismatched details before they cause costly delays.
Misdirected funds: Ensuring your payment lands exactly where it should.
Fraudsters thrive in environments where payments are instant and irreversible. Real-time payments are fantastic for speed, but they also remove the buffer to stop suspicious transactions. This is where VoP steps in—it acts like a gatekeeper, stopping bad actors before the transfer is complete.
In Europe alone, payment fraud costs run into the billions of euros annually. Every extra verification step is another brick in the wall protecting customers and businesses.
For banks, payment service providers (PSPs), and fintechs, it’s not enough to offer fast and reliable transactions. Trust is the real currency.
When customers see a visible confirmation that “yes, this account really belongs to the person or business you think it does,” their confidence grows. Over time, this builds loyalty—and loyalty in finance translates into long-term relationships.
Think of it as a restaurant showing you the kitchen before you eat. You might never have doubted them, but now you know they have nothing to hide.
The push for Verification of Payee (VoP) in Europe is largely driven by the March 2024 Instant Payments Regulation (IPR)—a game-changer for how payments are verified and secured across the EU. Under this regulation, by 9 October 2025 all payment service providers (PSPs) in the EU must offer VoP at no additional cost.
Importantly, VoP applies to both SEPA Credit Transfers (SCTs) and SEPA Instant Credit Transfers (SCT Inst). In both cases, the check must take place before the payer gives the final authorization for the transfer, adding an essential safety step to the payment process—whether the funds are sent in seconds or through standard settlement times.
The regulation sets out several key rules:
Free for users – No extra fees for accessing VoP checks.
Broad applicability – Applies to PSPs handling euro-denominated payments within SEPA.
Opt-out for bulk payments – Businesses submitting batch payments can choose to skip VoP if needed.
Liability shift – If a payer ignores a mismatch warning, responsibility for any resulting loss may shift to them.
The European Payments Council (EPC) is spearheading the rollout of the VoP framework, ensuring there’s a consistent, interoperable standard for PSPs to follow. Here’s how the timeline unfolds:
February 2024: Public consultation on the VoP scheme begins.
May 2024: Deadline for feedback from stakeholders.
September 2024: Release of Rulebook v1.0 along with API specifications.
October 2025: Regulation comes into full force, making VoP a mandatory offering.
This phased approach ensures that PSPs, businesses, and technology providers have time to prepare their systems and processes for a smooth transition.
VoP works through collaboration between multiple parties, each playing a distinct role in verifying payment details:
Requester: The individual or business initiating the payment.
Requesting PSP: The payer’s PSP, responsible for sending the VoP request to check the name–IBAN match.
Responding PSP: The recipient’s PSP, which verifies the account details and returns the match result.
By defining these roles clearly, the VoP framework ensures accountability at each step and builds the foundation for a more secure, trustworthy payments environment.
If the Verification of Payee (VoP) process were a postal system, Routing and Verification Mechanisms (RVMs) would be the tireless postmen making sure every request and response gets to the right address—quickly, securely, and in the correct format.
RVMs act as the communication bridges between Payment Service Providers (PSPs), ensuring that VoP queries travel seamlessly from the requesting PSP to the responding PSP and back again. In some cases, RVMs can also carry out certain verification tasks on behalf of the responding PSP, helping speed up the process or reducing workload. However, the ultimate responsibility for the accuracy of the match result always rests with the PSPs themselves—RVMs facilitate the process but don’t take over the accountability.
To make this interconnection possible, directory service providers and intermediaries maintain critical operational data—like who is participating in VoP, which endpoints to use for communication, and how different PSPs can interoperate without technical friction.
This “address book” for VoP ensures that every verification request knows exactly where to go, even in a complex, multi-PSP landscape. Recognizing the importance of such a resource, the European Payments Council (EPC) plans to launch a default Directory Service for VoP, creating a trusted central reference point. This will streamline onboarding for PSPs, reduce compatibility issues, and make the overall VoP network more efficient and reliable.
Requester initiates payment with IBAN and name.
Requesting PSP checks data and sends a VoP request.
RVMs may route the request.
Responding PSP validates info and replies.
Result is shared: Match, No Match, or Close Match.
3 seconds max for a VoP response (ideally under 1 second).
If late, the response is discarded.
If no match is found or time expires, the Requester is warned of the risks.
VoP isn’t binary. Here’s how responses are categorized:
Match: Exact match of name and IBAN.
Close Match: Minor spelling variations (e.g., Bob vs. Robert).
No Match: No meaningful match.
Matching is influenced by:
Upper/lowercase ignoring.
Diacritics normalization (e.g., ö → o).
Nicknames and informal names.
Note: Different PSPs may apply different rules for "Close Match," possibly causing fragmentation in the market.
Where ID codes (like tax IDs) are included:
Only Match or No Match applies.
EPC does not recommend third option (“Code not supported”).
For corporates handling high volumes of outgoing payments, the Verification of Payee (VoP) process works a little differently—but it’s no less important. When a business submits multiple transactions in a single file, the Payment Service Provider (PSP) is required to send a separate VoP request for each IBAN in that batch. This ensures that every payment, no matter how small or large, is verified individually for accuracy.
However, for large-scale batch processors like payroll departments or accounts payable teams, these constant warnings could create operational friction. That’s why the regulation allows businesses to opt out of receiving VoP warnings for bulk payments, provided this is agreed upon in their contract with the PSP. This flexibility is a practical safeguard—it keeps payment runs efficient while allowing companies to take responsibility for maintaining their own clean, accurate data.
To keep things consistent and interoperable across the SEPA network, VoP requests and responses must follow strict business and operational guidelines.
Each VoP message must contain a standard set of information, including:
Requester & PSP references – unique IDs for tracking the request.
Timestamp – recorded with millisecond precision for accuracy.
Account number (IBAN) – the number being verified.
BICs of both Requesting and Responding PSPs – to identify the sending and receiving parties.
Payee name – and optionally, related identification codes to strengthen the match.
A key success factor in VoP is data cleanliness. Even minor formatting differences—like extra spaces, titles, or punctuation—can cause unnecessary mismatches. To avoid this, PSPs must ensure:
Uniform naming conventions – names are entered consistently across systems.
Removal of non-essential elements – such as titles (Mr., Dr.), special characters, and extra spaces.
Case-insensitive matching – so “ABC Ltd” and “abc ltd” are treated the same.
These rules may seem small, but they have a big impact. By standardizing how data is stored and transmitted, PSPs can reduce false mismatches, minimize rejections, and deliver a smoother payment experience for both businesses and individuals.
The VoP scheme allows Responding PSPs to define their own Close Match rules. While flexible, this opens the door to inconsistent outcomes—what’s a match for one PSP might not be for another.
Optional identifiers like tax codes are another grey area. Some PSPs may not support certain codes, which could limit cross-border usability.
Key milestones:
Now–Sept 2024: EPC finalizes rulebook.
Oct 2025: PSPs must be live with VoP.
2025 onwards: Monitoring and adjustments based on feedback and real-world implementation.
TIPS (TARGET Instant Payment Settlement) may act as a central RVM to streamline the process.
With Verification of Payee becoming mandatory for SEPA single credit transfers, now is the time for corporates to get ready. Early preparation will help you avoid payment delays, reduce rejections, and keep your cash flow running smoothly.
Here’s what to focus on:
Clean your data: Review your payee records in ERP, accounting, and treasury systems to ensure names match exactly as they’re registered at the beneficiary bank. Remove titles, special characters, and unnecessary spaces that could trigger mismatches.
Understand VoP outcomes: Familiarize your teams with the three possible results—Match, Close Match, and No Match—and what action to take in each case.
Engage your suppliers: Ask vendors to use their official, bank-registered business names on invoices and payment instructions.
Contact your banks: Request details of their VoP implementation so you know exactly what checks they’ll perform and how results will be communicated.
Define internal processes: Establish clear steps for handling Close Match and No Match outcomes to avoid bottlenecks in approvals or urgent payments.
By preparing now, you’ll be well-placed to transition smoothly when VoP comes into effect—and you’ll gain the added benefit of cleaner data and greater payment security.
The Verification of Payee service is far more than just another regulatory requirement—it represents a significant step toward building a safer, more transparent, and more trustworthy digital payments ecosystem. In a world where transactions happen in seconds and fraudsters are constantly evolving their tactics, VoP acts as a crucial frontline defense, safeguarding both customers and financial institutions.
By ensuring that a payee’s name matches their IBAN before funds leave an account, VoP reduces the risk of fraud, misdirected payments, and costly human errors. It also reinforces trust—something no amount of technology alone can buy—by giving both senders and recipients greater confidence that money is going exactly where it should. Yes, there are still challenges to address—such as achieving consistent standards across PSPs and fine-tuning operational processes—but these are temporary hurdles. The long-term benefits of fraud reduction, operational efficiency, and improved customer confidence far outweigh the initial implementation effort.
For corporate clients, the priority should be readiness. VoP is not just a regulatory requirement, it’s a strategic opportunity to enhance payment accuracy, reduce fraud, and reinforce trust across financial operations. By preparing early—cleaning vendor master data, aligning naming conventions, and training internal teams, businesses can avoid disruptions and position themselves as reliable, secure partners in the digital payments ecosystem.
Cobase will be introducing a Verification of Payee feature in our portal for manually entered single payments. While most banks have yet to release their detailed specifications, our goal is to have this functionality ready ahead of the October 9th deadline. We also plan to extend VoP to batch payments, with implementation targeted for the end of 2025.
1. What is Verification of Payee (VoP)?
VoP is a fraud prevention mechanism that checks if the beneficiary’s name matches the IBAN before a payment is authorized and processed. It ensures that the person or business receiving the funds is the intended recipient.
2. Is VoP mandatory for all payments?
Only for SEPA credit transfers, both standard and instant, starting October 2025 in the Euro area. Batch payments remain optional (opt-in/opt-out).
3. How can I prepare for VoP?
Start by checking the payee names in your ERP/accounting systems to ensure they match bank records.
4. What happens if there’s a mismatch during VoP?
The payment may be flagged or rejected. That’s why accurate data is critical.
5. Can Cobase help with this transition?
Yes! Cobase is working on a solution to support the VoP transition. A Verification of Payee service will be available in our portal for manually entered single payments, and we strive to have this functionality in place before 9 October 2025. We're also considering a VoP service for batch payments, currently planned for release by the end of 2025. If needed, Cobase can assist with cleansing your payee data using a specialized tool available in October.