How verification of payee works
The payer enters a name and an IBAN. The payer's provider sends both to the payee's provider, which compares them with its own records and answers at once.
The payer then sees one of four outcomes:
- Match: the transfer goes ahead as normal
- Close match: the payer is shown the name that belongs to the IBAN
- No match: the payer is warned that the money may reach an account not held by the intended payee
- Check not possible: for example, the payee's provider could not be reached
What the regulation requires
Article 5c of Regulation (EU) No 260/2012, inserted by Regulation (EU) 2024/886, covers ordinary and instant credit transfers alike, whatever channel the payment order is placed through. The check may not prevent the payer from authorising the transfer, so the decision stays with the payer.
Providers in Member States outside the euro area have until 9 July 2027. Business users that submit payment orders as a package can opt out of the check.
A payer's provider that fails to carry out the check, where that failure leads to a defectively executed payment, must refund the payer without delay.
Why verification of payee matters to a product
The check targets misdirected payments and fraud in which a victim is given a criminal's IBAN under a trusted name. A provider of euro accounts builds both sides: asking before its customers pay, and answering for its own accounts.
Most do so through the European Payments Council's Verification Of Payee scheme, which sets the messages exchanged between providers. Name matching is harder than it looks: trading names, joint accounts, initials and transliteration all produce close matches.
Verification of payee or Confirmation of Payee?
- Confirmation of Payee
- The UK's account name-checking service for domestic payments, overseen by Pay.UK. The same idea, under separate rules and a separate network.
- IBAN validation
- Checks that an IBAN is well formed, using its check digits. It says nothing about who holds the account.
- KYC
- Identifies a firm's own customer at onboarding. Verification of payee checks the other party to a payment.
Where Verification of payee shows up in a platform
Modules that do the work
- Accounts & IBANsCustomer accounts with their own IBANs, on the partner bank and the rails you choose.
- PayoutsMoney out to bank accounts, cards and wallets, on the rail that fits each payment.
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
- Regulation (EU) 2024/886, the Instant Payments Regulation, Articles 5b and 5c as inserted (EUR-Lex)
- European Payments Council, Verification Of Payee (VOP) scheme
- Pay.UK, Confirmation of Payee
General information, not legal advice: what applies to you depends on your services and your market.