When the EU’s Verification of Payee (VoP) regulation took effect in October 2025, it closed a critical loophole in digital payments. Fraudsters had long exploited the gap between account identifiers and real account ownership—convincing victims to send money to the wrong person while believing everything was legitimate.
Now, with VoP officially in place, banks, payment service providers (PSPs), and FinTechs are expected to confirm whether a payee’s name matches their International Bank Account Number (IBAN) before payments are authorized. The shift may have been regulatory in origin, but its implications reach far beyond compliance.
Financial institutions that treat VoP purely as an obligation risk missing its deeper value: a powerful trust-building mechanism that can reduce losses, enhance data quality, and open new pathways for AI-driven real-time fraud prevention.
From Mandate to Market Expectation
According to the European Payments Council, the VoP framework applies to all PSPs offering instant or credit transfers within SEPA, requiring them to perform name-IBAN checks that meet strict functional and security criteria.
The October 2025 deadline marked the end of voluntary adoption and the start of market standardization. Yet, as seen in the UK’s Confirmation of Payee rollout, compliance alone isn’t enough. Early adopters that implemented advanced matching and clear customer messaging quickly found that customers noticed—and valued—the added assurance.
In the same way, European institutions can use VoP to differentiate. A fast, accurate, transparent name-check system signals to users that the bank actively safeguards every payment, even in real time. For consumers who fear scams and impersonation, that visible safeguard becomes a key reason to stay loyal.
The Fraud Frontline Has Shifted
Fraudsters have evolved faster than legacy fraud detection systems can adapt. Social engineering now drives most payment-fraud cases across Europe. UK Finance reported that authorized push-payment (APP) scams caused over £460 million in losses in 2023, with 76 percent originating from online sources.
Traditional transaction-monitoring tools rarely prevent APP scams, because the victim authorizes the payment. The fraud doesn’t stem from compromised systems—it stems from compromised trust.
VoP addresses that gap. By validating the intended payee’s identity before the transaction completes, institutions can interrupt the fraud chain in real time. It may look procedural, but its effect is behavioral: when customers receive a mismatch alert, they pause and think, “Am I sure this is the right person?”—breaking the scammer’s psychological control.
Implementation Challenges—and Opportunities Hidden Within
For many PSPs and smaller FinTechs, VoP integration proved more complex than expected. Issues such as inconsistent customer name records, fragmented data sources, and unclear error-handling created friction. Some banks reported early false mismatches due to variations in punctuation or special characters—problems that, if unaddressed, frustrate customers and undermine trust.
However, these same challenges create opportunities to modernize infrastructure:
- Data quality improvement: Cleansing and standardizing name data enhances not only VoP accuracy but also Know Your Customer (KYC) and Anti-Money Laundering (AML) programs.
- Cross-platform integration: Institutions can streamline APIs for both inbound and outbound payments, reducing operational silos.
- Customer-experience innovation: Clear, real-time notifications—“Name doesn’t match exactly; check before sending”—help educate users and reinforce shared responsibility for fraud prevention.
These enhancements are not merely technical upgrades; they reshape how financial institutions manage digital trust.
Pairing VoP With AI-Powered Scam Detection
While VoP verifies payee identity at the point of payment, fraudsters rarely confine their deception to one moment. They groom victims across multiple channels—email, text, voice, or social media—long before the payment request.
That’s where AI-powered scam detection, such as Scamnetic’s KnowScam, complements VoP:
- Multi-channel validation: AI can analyze communication patterns, URLs, message tone, and timing to detect impersonation before a transaction is ever initiated.
- Identity-proofing automation: By comparing digital behavior signals and public data points, AI can verify whether the person or entity requesting payment genuinely owns the identity being used.
- Real-time risk scoring : Rather than waiting for a mismatch alert, institutions can assign risk levels to each payee based on behavioral indicators, recent activity, and known scam typologies.
Together, VoP and AI-driven scam detection create a layered defense—one that detects deception both before and during the payment process. This hybrid model turns compliance controls into intelligent, adaptive safeguards that evolve as fraud tactics change.
A New Metric for Trust
The success of VoP will ultimately be measured not only in reduced fraud losses but in increased confidence. Customers who believe their bank protects them proactively are more likely to use instant payments, adopt new digital services, and remain loyal even in competitive markets.
Banks that embed VoP within their broader fraud-strategy—linking it with AI-based pattern recognition, behavioral analytics, and consumer-facing education—will position themselves as leaders in safety, not just compliance.
When viewed through this lens, the question for financial institutions is no longer “How do we meet the VoP requirement?” but “How do we use VoP to redefine what trusted payments look like?”
The October 2025 rollout marked a turning point: verification of payee is now the rule, not the exception. Those who view it as a regulatory burden will meet the minimum. Those who see it as a foundation for trust will set the standard.
Partner with Scamnetic to turn VoP into a strategic advantage.
