The Verification of Payee (VoP) scheme: Building a new layer of trust in European instant payments

The Verification of Payee (VoP) scheme, developed by the European Payments Council (EPC), marks a regulatory advancement for payment integrity, designed to help reduce fraud and misdirection risks across the Single Euro Payments Area (SEPA).

Effective from October 2025 for SEPA Payment Service Providers (PSPs), VoP aims to enhance trust and transparency by checking if a payee’s name aligns with their International Bank Account Number (IBAN) before a transaction or instant payment occurs.

The inception of the VoP scheme stems from the European Union Instant Payments Regulation (IPR), which amends the SEPA Regulation to make instant payments both universally accessible and safer across the eurozone. Recognizing that the alarming rise in fraud-related risk and potential for erroneous transfers was acting as deterrents for adoption of real-time/instant payments solutions, the IPR mandated the development of VoP systems as linchpins to help build trust and support consumer adoption.

All PSPs offering SEPA Credit Transfer (SCT) or SEPA Instant Credit Transfer (SCT Inst) services had a requirement to implement VoP by 9 October 2025. This included banks, payment institutions, and electronic money institutions operating within the European Economic Area (EU + Iceland + Liechtenstein + Norway).

1. Initiation: The payer’s PSP submits the payee’s IBAN and name.
2. Verification request: This information is relayed to the payee’s PSP via SEPA backbone networks or dedicated Routing and Verification Mechanisms (RVMs).
3. Validation: The payee’s PSP checks its customer records and returns a response—such as match, close match, no match, or unable to verify.
4. Response handling: The payer’s PSP relays the result to the customer, who can then decide whether to proceed or abort the transaction.

The four-step process targets completion within one second, with a maximum of three seconds permissible for execution.

The EPC Directory Service acts as a centralized lookup mechanism supporting interoperability and reach between PSPs. Every PSP participating in VoP needs to register with the directory to be recognized under the VoP scheme.

In the UK the Confirmation of Payee directory standardizes the exchange of identity data across SEPA while respecting General Data Protection Regulation (GDPR) and principles to minimize data sharing.

RVMs serve as intermediaries to support high-speed querying between PSPs, particularly supporting smaller banks or fintechs who may lack direct, bilateral connections.

VoP has direct implications for financial crime prevention. By proactively confirming account ownership, PSPs can help reduce authorized push payment (APP) fraud, business email compromise, and invoice redirection losses. Over time, VoP data is also expected to feed into anti-money laundering models and anomaly detection such as the Fraud Pattern Anomaly Detection initiative in Germany.

While the VoP rulebook standardizes core verification activities, PSPs have the ability to create “Additional Optional Services”. For example, enhanced fraud scoring, pre-validation APIs, or consumer-level alerts on “close match” notifications.

The EPC VoP scheme is more than a fraud mitigation tool. It has the potential to become an architecture for building greater trust in Europe’s instant payments landscape. Over time, its integration with central bank-backed infrastructures, AML ecosystems, and corporate treasury interfaces also has the potential to redefine the data foundations of payment verification. For PSPs and compliance leaders, early alignment offers the chance to gain a competitive edge in both regulatory readiness and customer confidence.

For information about Moody’s automated solutions for entity verification and customer due diligence, please get in touch with the team at any time—we would love to hear from you.