The EU payments landscape is evolving quickly, and new regulations are raising the bar for security and accuracy. One of the most significant changes is the introduction of Verification of Payee (VoP) as a mandatory requirement under the Instant Payments Regulation (IPR). From October 2025, Payment Service Providers in euro-area countries must ensure that payee information is verified before SEPA payments are processed across all channels, including UI, API, and file-based payment submissions.
Verification of Payee works by checking that the beneficiary name provided by the payer matches the account holder information held by the receiving bank. This process helps ensure that payments reach the correct recipient and reduces the risk of errors or fraud. While VoP is often associated with single payments initiated through digital banking interfaces, it is equally important for file-based SEPA payments, which are commonly used for payroll, supplier payments, and other bulk payment operations.
Implementing VoP offers several advantages. It helps organizations comply with regulatory requirements, reduces payment errors, mitigates fraud such as invoice redirection scams, and improves operational efficiency by identifying mismatches early in the process. In addition, accurate payment validation strengthens trust between businesses, employees, suppliers, and financial institutions.
However, the implementation of VoP also brings operational challenges. Handling near matches, where the beneficiary name is similar but not identical to the registered account name, requires clear workflows and decision-making processes. Organizations must determine whether to proceed with or cancel such payments. There are also technical considerations, including integrating VoP with existing payment infrastructure and managing potential latency when verifying large volumes of transactions in batch payments. Furthermore, the regulation requires VoP checks even for single payments in certain file-based scenarios, which can introduce additional processing steps.
Despite these challenges, VoP should be viewed as more than just a compliance requirement. It represents an opportunity for organizations to modernize their payment processes, strengthen fraud prevention, and improve overall payment reliability.
With the October 2025 regulatory deadline approaching, organizations should begin preparing their VoP strategies now. Early adoption will help ensure compliance, enhance payment security, and streamline payment operations in the long term.
Readers can read the full blog here:
https://blog.seeburger.com/verification-of-payee-addressing-regulatory-demands-and-operational-challenges-for-file-based-sepa-payments/.
1 https://www.ecb.europa.eu/paym/target/target-professional-use-documents-links/tips/shared/pdf/tipsmeetdoc/ecb.tipsmeetdoc240419_TIPS-CG_Verification_of_Payee_Service.en.pdf?62a1269b3685d609d96e0e1c9a11b94b (accessed 31 January, 2025).
2 https://www.ecb.europa.eu/paym/integration/retail/instant_payments/html/instant_payments_regulation.en.html (accessed January 31, 2025)