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The European Central Bank (ECB) has made it official that central banks in the Eurozone will be developing Verification of Payee (VoP) solutions, despite the existence of market options.
A VoP service for payment service providers (PSPs) across the Single Euro Payments Area (SEPA) is due to be made available by the Eurosystem.
This will support compliance with the EU’s new Instant Payments Regulation (IPR), under the terms of which name checks will be necessary from October this year.
The initiative builds on solutions developed by the Banco de Portugal and Latvijas Banka, and aims to provide SEPA-wide availability by October 9, 2025.
VoP is a fraud prevention measure that checks whether the name or identifier provided by a payer matches the account number (IBAN) of the intended recipient, echoing measures used in other jurisdictions, such as the UK’s Confirmation of Payee (CoP).
The new Eurosystem-backed service will enable PSPs to fulfil their legal obligation to implement VoP under the IPR, which has been one of the key challenges for firms preparing for the new requirements.
The Eurosystem’s VoP service will be available through two central bank-led solutions:
- Instant Verification Service (IVS) – Developed by Latvijas Banka, IVS will enable PSPs to verify the payee’s name or identifier against their IBAN. It will offer three service options: routing only; routing with immediate user response; or routing with a pre-validated IBAN/name database. Pricing for IVS has yet to be confirmed, but indicative fees include a monthly charge of €200–€350 and a per-transaction fee above certain thresholds.
- Banco de Portugal’s VoP Service – Banco de Portugal’s solution will be integrated into the Eurosystem’s TARGET Instant Payment Settlement (TIPS) platform, allowing TIPS participants to perform payee verification for SEPA credit transfers. This follows the success of a similar national-level Confirmation of Payee service launched in Portugal in 2024.
Relief for PSPs?
With VoP services becoming mandatory under the IPR, the Eurosystem’s coordinated approach ensures that all PSPs should have access to a compliant solution ahead of the October 2025 deadline.
The Eurosystem’s SEPA-wide solution provides a ready-to-use framework, reducing the need for PSPs to develop their own solutions.
Instead of building and maintaining individual VoP systems, PSPs can leverage the Eurosystem-backed solutions from Latvijas Banka or Banco de Portugal, which could mean lower development and compliance costs while also guaranteeing more seamless connectivity across SEPA.
A unified fraud prevention and verification process across SEPA should result in benefits for consumers and merchants in the EU, including safer, more predictable payments for merchants, whether domestic or cross-border in the trading bloc.
However, there are also issues with the introduction of a VoP service, such as the service’s likely impact on existing private-sector solutions.
So far, these have been offered by EU entities such as EBA CLEARING, as well as by other services such as SurePay, which has been providing CoP solutions to all major Dutch banks since 2017, as well as carrying out checks on behalf of Pay.UK in the UK. In addition, Banfico is used by Bank of America and the French retail bank Credit Mutuel Arkéa.
In some ways, this scenario mirrors the 2018 launch of the TIPS platform, which entered a market with pre-existing instant payment providers.
The introduction of a public VoP service that is SEPA-wide could ultimately lead to increased competition, encouraging private providers to innovate and offer more competitive pricing.
However, if the public service is offered at lower costs due to subsidisation or scale, it might undercut private solutions, potentially leading to reduced diversity and resilience in the market.
The overall impact will depend on how the service is implemented, priced and adopted by PSPs.
