A regulatory step to secure payments
Transfer fraud remains one of the most costly: all it takes is a falsified invoice or a phishing email to divert a payment. In Europe alone, so-called “IBAN” fraud represents several billion euros each year. With Verification of Payee, this type of attack becomes much more difficult. The payer is immediately alerted when the name provided does not match the account holder.
Its British equivalent, Confirmation of Payee, introduced in 2020, has led to a 20 to 40% reduction in losses related to transfer fraud and a nearly 60% drop in misdirected payments.¹ It has also increased user confidence in instant payments. The European market is following the same trajectory.
How does Verification of Payee work?
Before executing a transfer, the payer’s bank queries the reference registry (EPC Directory Service) to compare the name entered with that of the account associated with the IBAN.
The result is displayed to the payer in real time:
- MATCH: exact match
- CLOSE MATCH: partial match (typo, abbreviation, accent, particle, etc.)
- NO MATCH: no match detected
- CHECK NOT POSSIBLE: verification impossible (missing or unavailable data)
Following this, the payer is free to continue with the transfer or not. However, in practice, a “no match” greatly reduces the likelihood of the transfer being confirmed.
Verification of Payee: constraint or opportunity?
With the implementation of this system, CFOs are wondering: what organizational response should be implemented to maintain a seamless user experience, ensure transaction continuity, and preserve cash flow? Behind the regulatory requirements lie both challenges and real strategic opportunities.
A more secure, but more demanding, payer experience
For the transfer initiator, VoP provides immediate security: no more doubt, the IBAN matches the expected beneficiary. However, the slightest alert (“close match” or “no match”) can push the customer to interrupt the payment and thus have a negative impact on the business relationship.
For businesses, this imposes a new discipline: the bank name must be perfectly aligned with the one customers use. The slightest inconsistency, and a transfer could be delayed or abandoned.
What are the impacts for finance departments?
This new system is part of the Order-to-Cash cycle for companies, as it can affect their cash flow.
In many cases, the originator will have to correct their order and restart the transfer, thus extending settlement times (DSO) and complicating cash flow management. For finance, accounting, and sales teams, this can also translate into additional administrative work as they adapt their infrastructure and processes to these changes, particularly in terms of customer relations.
Some specific cases to watch out for
Some companies are particularly exposed to the risk of a “no match”:
- Companies known under a trade name: If a customer enters “Boulangerie du Centre” when the account is in the name of “SARL Dupont,” the transfer will be blocked.
- Multi-subsidiary groups: If the customer enters the name of the parent company when the invoice comes from a subsidiary (or vice versa), a “no match” will result and collection will be delayed.
- Marketplaces and platforms: Some payers may indicate the name of the website or brand instead of the legal entity holding the account. Here again, the risk is that the transfer will be blocked or abandoned.
A strategic opportunity beyond regulations
Aside from a few constraints, Verification of Payee is a lever for improving financial processes.
- Improving customer data reliability: VoP requires strict consistency in the information provided to customers. CFOs can take advantage of this opportunity to clean up their databases (ERP, CRM, accounting) and files to improve the performance of the collection cycle.
- Proactive anomaly detection: Each alert becomes a useful signal to identify data entry errors, contractual inconsistencies, or non-compliant customer practices.
- Instant payment accelerator: By reducing the risk of fraud and error, Verification of Payee creates the necessary conditions for the widespread adoption of instant transfers in B2B. This means faster collections and better cash flow control.
How to prepare by October?
Three priority projects are essential:
- Update the names in the repositories: Declare all brands, signs or sites to your bank or PSP in order to optimize the correspondences in the EDS
- Align contractual communication: Invoices, quotes, customer portals… everything must display the exact account name. Banish abbreviations, acronyms, or unnecessary references.
- Support clients and teams: Inform payers of the correct name, train accounting and sales teams to respond quickly to rejections.
Note: Verification of Payee only covers SEPA transfers, not international payments.
A standard that benefits both businesses and their clients.
In concrete terms, Verification of Payee means:
- More reliable collections, with fewer data entry errors and misdirected payments.
- Enhanced security, reducing the risk of fraud.
- Increased transparency, which strengthens trust in the business relationship.
At CentralPay, each IBAN is associated with a proprietary merchant account, guaranteeing a perfect match. Merchants can declare all their brands, trade names, and signs to maximize coverage.
By adapting now, finance departments are not only preparing for the Verification of Payee regulation: they’re also strengthening the resilience of their cash flow and laying the foundation for seamless adoption of instant payment in their business relationships.
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¹ UK Finance, Annual Fraud Report (2025)
