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Verification of Payee: A Security Pillar for Wire Transfer Transactions

As wire transfer fraud and identity theft grow more sophisticated, protecting financial flows has become a top priority for the European financial sector. In this context, Verification of Payee (VoP) stands out as a key solution. In accordance with Regulation (EU) 2024/886 of the European Parliament and of the Council of March 13, 2024, the implementation of VoP has been mandatory since October 9, 2025. It applies exclusively to standard credit transfers (SCT) and instant credit transfers (SCT-Inst) in euros, for both sending and receiving within the SEPA area.

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What is Verification of Payee?

VoP allows the real-time verification of a payee’s details before a transaction is finalized. The objective is to ensure alignment between the information entered by the payer regarding the payee (their identity and IBAN) and the information officially registered by their payment service provider. The payer is immediately notified of the verification result, enabling them to correct any potential errors or cancel the operation before funds are transferred.

This mechanism is essential for preventing fraud, particularly Authorized Push Payment (APP) fraud. In this frequent scenario, fraudsters use social engineering (impersonating a supplier or public administration) to trick the victim into validating a transfer to a fraudulent account themselves. By instantly verifying the identity of the target account holder, VoP disrupts this manipulation chain: it alerts the payer if the entered name does not match the actual account holder.

Why is Verification of Payee Important?

Until now, wire transfers relied solely on a technical identifier (the IBAN), leaving room for fraud via manipulation. By introducing real-time matching between the provided identity and IBAN prior to sending funds, VoP restores confidence in cashless payments by addressing three major challenges for the financial ecosystem:

Countering social engineering: VoP reduces fraud risks by detecting payments sent to fraudulent accounts, thereby protecting payers.

Reducing errors: Typos and omissions are common causes of payment failures. VoP immediately flags these errors, helping to streamline transactions and reduce operational management costs associated with rejected payments (R-transactions) or trace inquiries.

Building a foundation of trust for instant payments: In an environment where funds move instantly, certainty regarding the payee’s identity is vital for financial system stability. Users are more inclined to make online payments when they know their transactions are protected. By securing each financial operation, VoP strengthens trust in digital services and drives the adoption of instant credit transfers.

How Does Verification of Payee Work?

The VoP process takes place in 5 steps:

Initiation of the SEPA transfer: The payer enters the transfer details, such as the payee’s first and last name, IBAN, and amount, in their payment interface.

Verification request: The payer’s institution sends a verification request to the payee’s Payment Service Provider (PSP).

Information check: The payee’s institution compares the received data against the information stored in its systems.

Response return: The payee’s PSP sends back a response indicating whether the information matches. This response can be:

- Match: The information is accurate.
- No match: The information does not match.
- Partial match (almost match or close match): The information is similar but contains minor errors, such as a typo in a name.
- Verification impossible: Verification cannot be performed (due to a closed/non-existent account or technical unavailability).

Finalization of the transfer: The VoP result is communicated to the payer, who can then correct the order, cancel, or proceed with the transaction.

Consequences of VoP Implementation for FinTechs and the Ecosystem

For FinTech and embedded finance actors, the impact of VoP goes beyond simple regulatory compliance and directly influences their operating model:

Exemption of liability for the payer’s PSP in case of payee error, provided that all obligations set out in Regulation (EU) 2024/886 are complied with (i.e., implementing a robust VoP solution with prior warning notifications and messages issued to a payer who subsequently chose to ignore them).

How Treezor Addresses VoP Compliance: An End-to-End, Full-Service Approach

As a key player in payment services, Treezor implements solutions tailored to this regulatory requirement. As a BaaS leader, Treezor aims to guarantee service compliance and ensure transaction security for its clients and their end users. We natively handle the automation of VoP requests for our clients.

Ecosystem standardization and interconnection: VoP fosters collaboration across financial ecosystem actors, requiring seamless connectivity between financial institutions and PSPs to ensure real-time verification. This interoperability leads to European-wide data standardization, enhancing the overall resilience of the financial sector against cyber threats and improving transaction fluidity within the SEPA area.

To meet this global interconnection challenge, Treezor provides automated flow management:

Outbound transfers: Treezor proactively queries the payee’s provider by transmitting the IBAN coupled with identity data (full name or official business identifier).
Inbound transfers: Our infrastructure responds instantly to third-party financial institutions verifying the identity of your account holders, ensuring smooth inbound transfers.

Whether for inbound or outbound flows, our partners do not need to manage connectivity with multiple European databases.

Granular Identification: A Precision Requirement for B2B

The success of VoP relies on extremely granular entity identification, which is crucial in the B2B sector. To resolve frequent discrepancies between commercial names (often used by customers) and official legal names (registered by financial institutions), Treezor goes beyond simple text analysis and incorporates unique official identifiers such as SIREN or SIRET numbers into the verification process. This method eliminates ambiguities stemming from homonyms or multiple business names by certifying the payee’s identity, thereby securing enterprise financial flows.

Compliance and Privacy by Design: Security at the Service of Trust

Implementing VoP requires a rigorous framework where compliance becomes a performance driver. Treezor adopts a “Privacy by Design” approach where transaction security fully respects data privacy.

Guaranteed European interoperability: By aligning with the EPC’s (European Payments Council) VoP Scheme, Treezor ensures complete compatibility across all participating institutions within the European Union. This standardization enables our clients to benefit from an extended and fluid verification network.
Ethical data management (GDPR): The sharing of sensitive information is governed by ultra-secure encryption and transfer protocols in accordance with GDPR principles, guaranteeing the confidentiality of processed data.

With the deployment of the Verification of Payee feature, Treezor continues to provide a secure platform to its clients. Implementing VoP presents an opportunity to strengthen financial system resilience and protect the ecosystem’s most valuable asset: user trust.