European banks are running out of time to comply with incoming Verification of Payee (VoP) rules, and those considering opt-outs may be taking on more risk than they realise, according to FinTech firm Tietoevry Banking.
VoP is designed to reduce misdirected payments and combat fraud linked to instant payments. Where it is already live, the results have been striking. In the Netherlands, the technology has cut all-cause fraud by 81% and misdirected payments by 67%, verifying all parties to a transaction within five seconds.
Despite this, some banks are dragging their feet. Tietoevry Banking highlights two common justifications: national data privacy laws in some markets that currently restrict VoP-style services, and concerns about the cost of working with a Routing and Verification Mechanism (RVM) provider.
RVM providers manage verification requests and responses between banks, maintain API interfaces, and handle payee name matching, reducing much of the operational complexity banks face in meeting the new rules.
However, Tietoevry Banking warns that opting out carries significant consequences. Liability for fraud in SEPA payments will shift to banks that fail to implement VoP. Given that corporate payments represent a market three to four times larger than consumer transactions, the financial exposure from undetected fraud could be substantial.
Some corporate clients are also cautious, particularly those processing batch file payments, who fear VoP could slow their operations. Tietoevry Banking argues this concern is misplaced. VoP is applied before a payment is sent and does not inherently delay batch processing. When properly implemented, it can actually reduce the need for additional security checks, streamlining the overall process rather than adding friction.
Tietoevry Banking is registered as an RVM provider with the European Payments Council and, through a partnership with Movitz Payments, manages identity confirmation for both payers and payees on behalf of banks. The firm says its service includes request and response management and advanced file handling to support both corporate and individual customer requirements.
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