Latest news with #VerificationOfPayee
Finextra
3 days ago
- Business
- Finextra
A crisis of trust: European and global verification brings safety to payments
0 This content has been created by the Finextra editorial team with inputs from subject matter experts at the funding sponsor. Verification of Payee (VoP) has rapidly become an essential aspect of banking and payments, ensuring security and safety in payments transactions. By October 2025, all European Payments Service Providers (PSPs) using SEPA instant and non-instant transfers will need to verify payee account details before processing payments. As the EPC's deadline is fast approaching, PSPs must urgently implement the VoP scheme or risk falling behind regulatory compliance and industry standards. The European Instant Payments Regulation and EPC VoP scheme requires all credit transfers across the Eurozone to be accompanied by a match of the account beneficiary's name. To comply, almost 5,000 European financial institutions will need to introduce a Routing and Verification mechanism (RVM) to make VoP requests and responses. Shedding light on the subject, Finextra spoke to Michael Moon, head of strategic market development at iPiD. This article outlines the main challenges facing VoP adoption, the solutions offered by third-party providers, and what VoP adoption will accomplish for the faster payments industry, both nationwide and on a global scale. Moon states: 'In the instant payments era, if you don't have the protections against the fraud and mistaken payments, your business is going to become a lot harder to operate.' Why is the VoP scheme essential? As instant payments increase, so does fraud and so must global verification confirmation services, as Moon points out. The impersonation and manipulation tactics that are being used by fraudsters to authorise payments have created what Moon labels a 'crisis of trust.' Verification of the payee is of critical significance to prevent fraud, and so the VoP mandate is arriving at a critical time to accompany instant payments growth as it continues to skyrocket. According to Moon, 'the world has been introduced to faster payments for many years now. Instant payments are incredibly pervasive across many countries in the world. Certainly in Europe, there have been efforts to increase instant payments. 'More recently, the European Commission introduced a regulatory package known as the IPR, or Instant Payments Regulation, and that came from dissatisfaction in Europe with the level of adoption of instant payments in the market. What the regulation made clear is that, if you are a payment service provider in the business of making credit transfers, you need to offer the ability to both send and receive payments on an instant basis,' states Moon. Recognising the potential risks that accompany speed, the regulator, with the benefit of international evidence such as the UK's Faster Payments system, acknowledged that instant payments inevitably leads to greater fraud risks. As such, the widespread adoption of instant payments could not be pushed forward in isolation, without appropriate safeguards. Hence, the VoP mandate was born. VoP, while not a silver bullet, has had a direct result on clamping down on fraudsters. In 2023, the UK's equivalent initiative Confirmation of Payee (CoP) led to a 17% decrease of APP fraud in 2023. According to data from Fortra in 2025, 77% of businesses uses CoP to prevent fraud and 96% agree that CoP is effective in reducing fraudulent transactions. Challenges to satisfy the approaching deadline A major challenge that financial institutions will need to overcome is managing their time wisely. Meeting the 9 October deadline requires phases of testing to be completed by July to ensure full readiness by the autumn, which sets PSPs on a tight timeline for preparation. Furthermore, global cross-border fragmentation adds another layer of complexity to meeting the deadline. Organisations that operate in multiple markets have more regulatory requirements to navigate. Moon added that large banks and payments firms that have a significant portfolio of corporate clients will also have to manage the complications of providing verification services for them as compared to individual customers. Third party providers can offer verification and validation schemes that understand and can streamline the transaction process. Moon points out that institutions looking to standardise their services across multiple markets and customer bases can gain support from third party providers that are best placed to serve their validation needs: 'These third party suppliers can help with the specific processes of making VoP requests and responding to those requests, as well as integrating with and orchestrating transaction activity with various services that need to be consumed to perform this. For example, there is a centralised electronic addressing service, the EPC Directory Service, which is a digital address book that identifies the recipient of these requests. Third parties, the RVMs, are the traffic police; sending, receiving, and responding on behalf of the payment service providers.' Moon mentions how these third parties can offer a Know Your Payee (KYP) scheme aimed at standardising responses and solving dissonance in global transactions. Using iPiD as an example, Moon highlights how global KYP providers do the work of connecting services and creating a standardised response to the sender of any validation or verification request: 'Financial organisations get the benefit of global coverage and reach to different verification services and actually standardising that back into their environment, so they don't need to deal with the different levels of capturing and presenting data.' Moon further explains that there are two forms of verification services that can be provided to PSPs: A lite provider that directs the traffic, managing requests and responses. A full provider which offers more in-depth features that manage the level and scale of verification activity throughout Europe, such as having records of history and transaction activity to ensure a request was made and provide evidence of that request and transaction if needed. The liability scheme that is soon to be introduced will hold PSPs accountable for any loss due to fraud or scams, which is why it is key to have evidence of transactions and transparency through the VoP scheme. Outside of scam and fraud, major inefficiencies such as mistaken payments and amending errors in the payments process can be resolved through VoP protocols. Moon emphasises that improving defenses against scams both at a local level and a global level are essential, as verification is being introduced in various forms in different nations. Moon concludes: 'As you move money faster, the risks of losing money to fraud and scams, particularly with the commensurate level of digitalisation in payment services, fraud losses and risks increase. We expect that all payments, whether they are local, in a single country like the UK or within the European marketplace, or payments that are conducted cross border and globally, we see all those payments having an upfront form of validation or verification. We think that is a necessary way to operate in the future.'
Finextra
3 days ago
- Business
- Finextra
EBAday 2025: What is the implementation feasibility of VoP and instant payments?
At EBAday 2025, two expert panels explored the challenges of Verification of Payee and fraud prevention, as well as how growing volumes of instant and real-time payment systems impact PSPs and their customers. 0 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. Securing payment transactions The first panel, moderated by Lu Zurawski, payment specialist, Payment System Regulator, was made up of Jacques Vanhautere, director general, Kannan Rasappan, CEO, Banfico; Nicolas Trimbour, head of fraud prevention BNP Paribas Cash Management and CDO, BNP Paribas; Olivier Julou, payment fraud expert and crédit agricole representative in French and European fraud workgroup, Crédit Agricole, and Sheri Brandon, global head of new business, Worldline Financial Services. The conversation opened by Zurawski outlining the October 2025 Verification of Payee (VoP) go-live date, asking the panellists for their concerns on implementation feasibility and delivery risks. Rasappan noted, "it's the implementation. It's a big bang. We're building the infrastructure, and we're going live, and that's where the delivery risk to comply on the day is very high… in EPC we are doing a big bang approach for 3500 institutions. It's what I see is a big risk there, and an important risk." Vanhautere agreed, also emphasising how the deeper challenge lies in preparing end users, both individuals and corporates. "It's about the final goal, the customers, this process is not only for banks, and we will have an issue if they are not well organised to follow what will be in place in October. We need communication, we need information," said Vanhautere. Trimbour highlighted difficulties in harmonising existing and new systems to ensure a seamless customer experience: "we have challenges about interoperability of existing schemes, and new schemes to curate everyone to be ready for." Julou echoed those concerns, also focusing on the necessity of accurate data management: "data is key, because we are not starting from nothing. We already have data registered by consumers, which is beneficiary. So we have to manage that." Julou added that VoP is not a 'silver bullet' for fraud, emphasising the importance of maintaining trust through consistent communication and system performance. Brandon noted that bulk payments - especially those involving multiple banking relationships - present a unique operational hurdle. Without consistent rules, corporates could face chaos: "if one bank sends the whole file back because VOP fails, or the other banks have only the only individual cases the corporate is going to go crazy." Towards the end of the session, panelists looked to the future. Julou emphasised the importance of multi-sector collaboration to outpace fraudsters, who now operate across digital platforms, not just banking systems: "fraud doesn't go beyond PSPs today, they are using WhatsApp, they are using social media... so we have to collaborate across all these technologies." Vanhautere closed with the reminder that while the technology is essential, clear communication to the public is even more critical. "The launch is in four months. We have a huge need for information and communication for end users. The main message to all those end users is to say, please clean up your database, please clean up your work ethic." The real-time (r)evolution The following panel, moderated by Elena Casal, chief client officer, The Clearing House, was made up of David Voss, head of global payments services EMEA, Bank of America; Esther Galiana, head of cross-border payments and cash management solutions, BBVA; Dr Hubertus Von Poser, head of sales and consulting payments, PPI, and Simone Del Guerra, head of central institutions & international sales, Nexi. Opening the panel, Castell framed the conversation by asking: "what do we see today, and what will we look forward to in the next six to twelve months?" Del Guerra, emphasised that Europe's rollout of instant payments has been shaped by uneven adoption, commenting, "we've had various different requests from various commercial banks, because, irrespective of the fact we all live in Europe, each country has different levels of implementation and usage. The Nordics and Italy are far not only from a geographical standpoint, but also from a consumer behavior standpoint." Galiana echoed this sentiment while underscoring the demand for real-time treasury solutions: "this trend of real time treasury trying to provide corporates with the availability of real time information of their balances, their position, the traceability of the payments, is something we've been very much involved in." Von Poser offered a balanced view, highlighting both incremental progress and transformative change, "my perspective is long run. It's an evolutionary past, but there will be some revolutions in every steps, especially when it comes to adapting the infrastructure. We probably also need some revolutionary steps or revolutionary products, to be more successful on the client side." From Voss' perspective, "2025 probably feels like the year of instant payments," whilst cautioning that the evolution is not only about infrastructure. "There are obviously other things to deliver beyond just the payment rails around complying with the other parts of the IPR," Voss explained. Voss added further that request-to-pay integration with invoicing could unlock significant value: "if corporates send invoices to the bank, and the bank is then generating request-to-pay and booting it to the payer, it really helps corporates with reconciling payments and invoice data." The conversation also acknowledged the looming October 2025 regulation deadline and the risk of delay in adoption. Galiana emphasised the need for harmonised regulation to ensure a consistent experience across providers and borders, with Voss pointing to SEPA as a regulation-led success: "we need regulation for fostering instant payments... SEPA is a success story, and it was driven by regulation." Looking ahead, all panelists agreed on one thing: the next 6–12 months will be critical. "There's a lot of uncertainty right now," said del Guerra. "There's a lot of work that needs to be put not only on the front side... but clearly on software and delivery of service."
