Last week, the European Payments Commission (EPC) posted the Verification of Payee (VOP) scheme rulebook following a public consultation. The rulebook is for payment service providers (PSPs) in the Single Euro Payments Area (SEPA). This applies to the EU Instant Payments Regulation (IPR) and the validation of a payee for credit transfers. Future versions of the VOP rulebook may cover other payment instruments.
The V.1 version of the rulebook is available here.
CI received a comment from Pratiksha Pathak, Head of Payments Services at RedCompass Labs, on the rulebook and possible challenges for banks. She believes the time limit to provide verification and other deadlines are difficult for banks to overcome.
“The new Verification of Payee (VoP) rulebook is a strong move against the backdrop of increasing fraud, but it presents several challenges for banks to navigate. With these extremely tight deadlines, financial institutions will need to implement a VoP solution across all payment channels by 5th October 2025. The rulebook applies to both SEPA and SEPA Instant payments, meaning banks have a substantial task ahead. One major challenge is the requirement for banks to verify account details within five seconds across all payment channels. This means the payment engine and all customer-facing channels must be highly available, fast, and scalable. Performing these verifications in real-time for every payment initiation is going to be a big challenge because it introduces significant complexity to banks’ systems,” says Pathak. “Another complexity is that each payment within a bulk file, such as salary payments, must be individually verified. This means checking whether the payee’s name matches the account details for every transaction, which becomes particularly challenging when processing large volumes of payments. Banks will also need to ensure that all their payment channels can incorporate VoP functionality without disrupting the current flow. This is going to be a particularly big lift for banks with multiple existing payment channels.”
Pathak added that the centralized database, EPC Directory Service (EDS), is being introduced to standardize payee information verification across European banks means banks must now find a routing or verification mechanism (RVM) to send and receive requests. “Setting up or partnering with an RVM to manage this new process will present another hurdle for banks,” she explained.
