The central banking system of the Euro zone is to offer a Verification of Payee service for PSPs in the Single Euro Payments Area.
Under the EU Instant Payments Regulation, payment service providers will be required to offer a Verification of Payee (VoP) Service for euro credit transfers.
The new regulation requires payers to be informed of any discrepancies between the payment account number and the intended payee’s name. The payer can then decide whether or not to initiate the payment, depending on the result: 'match', 'close match', 'no match' or 'other'.
The Eurosystem has been conducting exploratory work on VoP since August last year, building on the services developed by the Banco de Portugal and Latvijas Banka, which have been designed in accordance with the VoP scheme developed by the European Payments Council.
The introduction of a VoP service is expected to reduce the risk of fraud and payment errors by allowing payers to verify the account details of the intended recipients before payments are initiated.
The new service, co-ordinated by the Eurosystem and utilising the Portuguese and Latvian VoP schemes, will be available for instant payments, including those settled in Target Instant Payment Settlement, as well as for Sepa credit transfers.