VOP Countdown: VOP checks and corporate payments
30 days, that is all that is left for Payment Service Providers to implement their Verification of Payee services. LUXHUB, with its Payee Verification Platform, supports PSPs by providing a robust Verification of Payee (VOP) solution. Yet, in the market, it remains several open points and challenges, notably related to the impact of VOP on the corporate payments flow.
With VOP just around the corner, most Payment Service Providers are almost ready and have already started to test their implementation of name matching solution and have validated their registration into the EDS (EPC Directory Service). The key question of corporate payment flows and how VOP integrates in them is still open and therefore raises several questions on the PSPs’ and corporates’ sides.
Integrating VOP in the corporate payment flow: three main challenges
Usually, for most channels, processing corporate payments requires sending a pre-authorized batch of payments. With VOP arriving in a month or so, this new obligation can represent an important friction, as it requires the corporate to review the VOP feedback (close match, no matches in particular), in order for them to take an informed decision and decide to go through with the payment or not. On the other hand, opting out of VOP can be an option to avoid this upcoming friction. Yet, with IPR (and therefore VOP), it also puts the payer (here, the corporate client) at risk in case of a payment ending in a fraudulent or wrong account.
Moreover, different channels – and formats – exist. This means that there are potentially several possible formats and channels that the PSP needs to adjust in order to successfully collect the payees’ information sent by the corporate, but also to provide the latter with aggregated feedback that will notably include the matching results. Interbank communication standards like Swift or EBICS, notably, have had this topic on their agenda for quite some time, in order to prepare corporates to this upcoming significant change in the corporate payment flow. For instance, EBICS – which provides uniform communication throughout Europe for PSPs and corporate – already came up with a first solution with adapted pain.001 and pain.002 files exchanged between the corporate and the Payer’s PSP, to exchange the opt-in/out information as well as the VOP input and output data. This requires several checks (either done by the PSPs or a third-party provider).
Finally, an important part of corporate payments are batches composed of many instructions – for some, it can be up to several thousands. The current EPC Scheme implementation and specifically API supports single checks. That means that PSPs have to technically handle a huge number of requests and ensure that they are correctly aggregated at the end. The EPC explained that the bulk VOP topic might be dealt with after October 9th, probably sometime in early 2026.
The Payee Verification Platform
At LUXHUB we’re exploring alternatives with the ambition to support PSPs as well as corporates and make sure that it causes minimum friction to all parties involved. On a technical level, we developed dedicated endpoints to initiate a bulk VOP check and retrieve the corresponding VOP check results that enable large Verification of Payee checks at a larger scale.
These endpoints could be used in three different possible scenarios. Currently, only the first one is available, while the second could potentially be developed. And the third one, being at the limit of the scope of IPR, requires specific attention on the legal framework between the parties.
1. Bank supports additional steps for VOP flow with Corporates
- Bank receives as usual the signed payment file/instruction
- Bank uses LUXHUB Bulk VOP check endpoints to check beneficiaries received in the payment file
- In case of a not happy flow, the feedback is sent back to Corporates and a new file is expected
2. LUXHUB supports an adapted VOP flow with the bank/EBICS provider
- Bank receives a modified payment file containing only payee information (pain.001)
- Bank forwards the file as is towards LUXHUB
- LUXHUB replies to the file in a VOP-adapted payment response file (pain.002, …) to the bank
- Bank forwards the file as is towards the Corporate
- Corporate makes necessary changes to the file before sending a new pre-cleared signed payment file (opt-out information to be sent with each file or agreed upon for all)
3. Direct VOP flow between LUXHUB and Corporate
- Corporate integrates with LUXHUB VOP services to pre-check beneficiaries (to be defined under which contractual setup)
- Corporate sends pre-cleared signed payment file to the bank
- Bank sends the file for execution (with either opt-out mention or VOP proof)