What is SEPA Verification of Payee?
Verification of Payee (VoP) is a security procedure that was determined by the EU Commission and will soon be mandatory for the SEPA area in order to increase the security of payments and prevent fraud. Essentially, VoP enables banks to verify the identity of the recipient of a payment before the payment is made.
Within the SEPA area, VoP will be mandatory for all SEPA transfers as part of the PSD3 / PSR, regardless of whether it is a classic “CT” transfer or the real-time transfer “CT Inst”.
The law governing the regulation was published in April 2024 and thus came into force. According to the time specifications, EURO countries must fulfill passive participation (SEPA Inst acceptance) 9 months after entry into force, i.e. in January 2025. After 18 months, i.e. in October 2025, active participation for SEPA CT Inst. and the IBAN name comparison (VoP – Verification of Payee) will then become mandatory.
GOAL
VoP aims to ensure that the payee is really the person or organization that the payer intends to pay. This helps reduce confusion, errors and fraud.
HOW IT WORKS
When a person or organization wants to make a payment, the payee (receiving bank or payment service provider) provides the payer with information that can be used to verify the identity of the recipient. Typically this is the recipient’s name and other identifying features if necessary.
PROCESS
Before making a payment, the sending bank (payer bank) passes the provided payee information (IBAN + account holder name) to the receiving bank. The receiving bank performs a name match and then returns the result/status of the check. If the information matches or there are no concerns about the match, the payment is made. If there are discrepancies or the information cannot be verified, the payment can be stopped or the payer informed of the risk.
GOALS / BENEFITS
VoP is designed to reduce the likelihood of mis-transfers that could be caused by typos, fraud or confusion. It provides both the payer and the payee with additional security and trust in the payment process.
Overall, Verification of Payee aims to improve the integrity and security of payments by ensuring that payments only go to the intended recipients and not to unauthorized or erroneous accounts.
Here to the alseda VOP solution
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