What’s new for the bank’s customer/account holder?

When a customer intends to initiate a credit transfer, whatever the channel, its bank will have to offer him/her a service ensuring verification of whether the name and the IBAN of beneficiary match, do not match or almost match. This information shall be provided before the payer is offered the possibility of authorizing the payment in order to enable the client to correct the data or to decide not to authorize the payment, should there be a “close” or a “no match”. Apart from professionals performing bulk payments, clients cannot opt out from this service. In the event the client decides to authorize a credit transfer despite a “no match” and provided that the PSP complied with all its obligations, the latter shall not be held liable if the credit transfer reaches an unintended beneficiary. Should the service be unavailable or return incorrect answers, the PSP of the payer or the PSP of the payee might be held liable, as the case may be.

As explained by Claude MEURISSE, CEO of LUXHUB, “Verification of Payee will positively impact the payment journey of every bank customer, by enabling safer transactions, through an immediate IBAN-name check verification.”

VoP – a strategic project for PSPs

Many PSPs have currently put their focus on the implementation of instant payments, given that it is mandatory to be able to receive instant payments within 9 months and to send instant payments within 18 months from the publication of the Instant Payment Regulation.

This prioritization is logical. However, it is important to raise a few points of attention, which shall invite any PSP to consider VoP as a strategic project:

• More security and trust in payments. The deployment of VoP will significantly help reducing the fraud cases, particularly in the context of instant payments. Through a consistent user experience and with less mistakes, VoP will also reassure clients who will be able to (instantly) transfer funds to the right recipient. On the PSPs’ side, the ones not supporting VoP run the risks to be liable in the event of credit transfers initiated to a wrong beneficiary but also to be particularly targeted by fraudsters.
• Ensure a smooth user experience. The way VoP will be provided through the different payment initiation channels will be key to its success. On the one hand, PSPs should consider the user experience as a key aspect of the project in order to avoid confusion and potential mistrust from their customers. On the other hand, starting to inform the customers and potentially deploying the system gradually before September 2025 will enable customers to get used to the service and adopt it in their normal payment initiation journey.

VoP – a project with the two sides of the same coin

VoP implies (i) for the payee’s PSPs to provide a verification of payee (VoP) service, available 24/7, and (ii) for the payer’s PSP to send VoP requests to any PSP in the European Union. A challenge on which LUXHUB has been working on for a long time to help PSPs in their compliance journey.

(i) Providing Verification of Payee

The VoP obligation implies for PSPs to expose a service accessible by other PSPs at any time. Once a call reaches the VoP service, a check shall be done on the PSP’s database to verify whether there is a match or not, or potentially a close match, between the provided name (or another identifier for a legal person) and the IBAN. Such check requires the use of a solid algorithm, which is compliant with the forthcoming EPC’s VoP scheme and should also embrace some local requirements.

Based on its strong API and data expertise, LUXHUB has been working for more than a year on the platform supporting the VoP.

(ii) Unified Access to Verification of Payee

The VoP being both an obligation for the payee’s and the payer’s PSPs, the latter must ensure that they are able to reach any payee’s PSP in the European Union immediately. Creating connectivity with thousands of PSPs is huge challenge, particularly within such a short deadline.

It is the reason why LUXHUB intends to act as single point of contact for its customers, based on partnerships established with other European providers or on direct connectivity.

Based on its PSD2 aggregation expertise in the European Union within the context of its “ONE” family product, LUXHUB has been building a strong experience in establishing and maintaining connectivity towards payment service providers. This experience is today leveraged in the context of the Payee Verification Platform to best serve LUXHUB customers and enable them to meet their obligations.