Recipient verification: one step further towards safer payments in the euro area

The Eurosystem has completed the exploratory phase of its Beneficiary Verification Service (VoP), a tool designed to enhance the security of euro payments. This initiative is part of the European Regulation on Instant Payments (2024/886) and aims to support payment service providers (PSPs) in implementing the new regulatory requirements.

FACTS

• The Eurosystem has completed the study of a Beneficiary Verification Service ("Verification of Payee"or VoP) to help payment service providers (PSPs) to comply with European standards on euro transfers.

• This scheme is based on solutions developed by Banco de Portugal and Latvijas Banka, in accordance with the VoP scheme of the European Payments Council.

• The VoP will inform payers of any inconsistency between the account number and the beneficiary's name before a payment is validated.

• It will cover both instant payments via TARGET Instant Payment Settlement (TIPS) and conventional SEPA transfers.

• PSPs operating in the euro area will have to offer this service to their customers before 9 October 2025 in order to comply with European requirements.

ISSUES

• Strengthening of security: By providing payers with an upstream audit of the recipient, VoP significantly reduces the risk of fraud and payment errors. In particular, the scheme restricts fraud attempts related to the change of RIB or errors of entry.

• Compliance with the regulatory framework : With the obligation for PSPs to implement this service before October 2025, VoP becomes a key element of compliance with the new European rules on instant payments. It thus helps market players to anticipate and meet new obligations without disrupting existing payments flows.

• Harmonization of practices: The Eurosystem shall ensure uniform implementation of the VoP within the euro area, facilitating its adoption by the PSPs and ensuring a uniform user experience for both businesses and individuals.

• Reliability of transactions: By ensuring a correspondence between the beneficiary's identity and the associated account, VoP strengthens user confidence and reduces the number of rejected or contested transactions. This makes payments more efficient, especially for high value-added transactions.

• Optimization of cross-border payments: The expansion of SEPA to new countries, such as North Macedonia and Moldova, underlines the need for payment security tools. The VoP makes it possible to harmonise and strengthen the security of transactions beyond the traditional borders of the euro area.

PERSPECTIVE

• Opening up to new payment players: Enlargement of access to payment systems from the Eurosystem to the PSP non-banking shows a desire for modernisation and innovation in the financial sector. The implementation of VoP is part of this dynamic by building confidence in transactions, while integrating fintechs and new players.

• Complementarity with Digital Euro The development of a European digital currency and the exploration of distributed registry technologies (DLT) by the European Central Bank (ECB) underline the importance of a reliable payment infrastructure. VoP, by securing payments, is a key link in this transformation and contributes to the strength of the European financial ecosystem.

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