Payments Regulatory Landscape #2, Part I: focus on IPR and VOP
On April 23rd, 2025, LUXHUB and A&O Shearman Luxembourg organized the second edition of their “Payments Regulatory Landscape” event, which gathered around 60 finance and payments professionals. The experts focused on several key topics, and started with the most recent Instant Payments Regulation milestones and the latest Verification of Payee (VOP) developments.
Baptiste Aubry (Partner, A&O Shearman Luxembourg) officially opened the event and highlighted that in the current context, several opportunities will arise for Europe, especially in the payments and fintech sectors: “there is a bright side for us if we’re willing to take these opportunities. And these will come with the right incentives and targeted/right regulations”.
Instant Payments Regulation: lessons learnt and upcoming deadlines
This panel discussion brought together Galina Miroshnichenko (Payments & Digital Adviser, ABBL), Maria Kristensen (Senior Project Manager, BIL) and Carole Schmidt (Knowledge Counsel, A&O Shearman Luxembourg). It was moderated by Anne-Sophie Morvan (Chief Commercial Officer, LUXHUB).
Carole Schmidt first shared a summary of the various obligations under IPR as well as the different deadlines depending on whether the PSP (Payment Service Provider) is a bank or Payment/E-Money Institution: receipt/sending instant credit transfers in Euros through the same initiation channels as standard credit transfers and with the same level of charges, sanctions screening of Payment Service Users (not on a transaction by transaction basis, but rather checks against PSU database by each PSP, at least on a daily basis), etc. She also highlighted the Verification of Payee (VOP) obligation, which consists in ensuring that the IBAN matches with the name of the payee, and applies for all credit transfers in Euros.
Galina Miroshnichenko highlighted how the ABBL has been assisting PSPs in their compliance journey with regards to Instant Payments (IPs). The association’s Payments Cluster counts more than 60 payments experts and ABBL members have created a specific task force on the IP topic. Moreover, the ABBL released a position paper with members’ comments and reached out to MinFin, EU Council, European Parliament, EBF and the European Commission. Several workshops (with the Central Bank of Luxembourg, CSSF and PSPs) have been organized over the last months, destined for different groups within the ABBL. Finally, she highlighted that as a NASO (National Adherence Support Organization), “the ABBL can also support PSPs with adherence to the different European Payments Council (EPC) schemes”.
Maria Kristensen then explained how (and why) BIL implemented Instant Payments in a phased approach, way before the January 9th deadline. “It was done in different phases: we started with internal IPs, then with our partners in Luxembourg, and then initiated cross-border IPs. Also, we decided to go for IP as default,” she added. On the compliance side, the bank had to adapt to this first deadline and additional changes will have to be done by October. She explained: “to be in line with the regulation, we had a new release in January, which impacted our compliance team. And other teams will be impacted in the next months, especially when it comes to VOP”. Maria Kristensen then focused on how BIL, as a direct participant in the TIPS Scheme, can help other banks – that therefore act as indirect participants – comply with IPR. “In addition to having an account at the European Central Bank, we are obliged to be up-to-date with TIPS. Indirect participants do not have to worry about this and can rely on BIL”.
Carole Schmidt then explained how A&O Shearman supported its clients with these first IPR deadlines: “the first point of attention of the actors that we assisted was to clearly understand the scope of application of IPR in view of mapping the payments that would be in scope”. Several actors then questioned whether IPR imposes to offer both standard credit transfers and ICT: the EC’s FAQ confirmed that PSPs can decide to only offer Instant Credit Transfers. Moreover, IPR also requires a review of applicable contractual documentation to reflect the new specific regime but also, where applicable, exercise options offered by the text. Carole then mentioned the recent law of 4 April 2025, which implements IPR in the Luxembourg legislative framework: “it sets out the conditions that PI/EMI must comply with in order to become direct participants in designated payments systems. And it defines the sanctions that the CSSF may impose upon supervised entities in case of breach of IPR obligations”. These administrative fees can go up to 10% of the annual net turnover.
The discussion ended with Galina sharing some of the key challenges and specific difficulties met by PSPs in Luxembourg in the last months. Some of these included the user experience which could be different from one PSP to another (instant payments as a default or not, for instance), and implementation topics such as liquidity and forex management, communication to the general public and corporates to inform about IPR and VOP, etc.
Verification of Payee: latest developments
The second part of the conference featured Claude Meurisse (CEO, LUXHUB), with a special focus on VOP, “one of the most important topics of the year, with only 5 months left before the October deadline”. He shared several timelines highlighting that many documents have been published since last year, with an acceleration in the first months of 2025 to push the deployment of the EPC VOP Scheme. Last year in April, only two documents were available: a draft of the EPC VOP Scheme Rulebook and the matching guidelines. Since the publication of the actual EPC VOP Scheme Rulebook in October, several key documents have been made available to PSPs.
Claude then focused on the role of RVM (Routing and/or Verification Mechanisms), “a central piece in the Scheme as they are intermediaries on the requesting side for routing VOP exchanges between participants, and on the responding side for providing matching results on behalf of the participants, leveraging the EDS to enable cross-border interoperability and reachability”. RVMs can also act as an authorized agent to facilitate adherence to the VOP scheme and perform updates on EDS through Web GUI or EDS APIs. Moreover, they must expose their own VOP API testing sandbox and provide VOP (aggregated) statistics data to the EPC on a quarterly basis.
The next focus was laid on the VOP Scheme adherence process, with Wave 1 already open since March 24th. “We really encourage PSPs to do it as soon as possible, as being part of Wave 1 will allow them to test with their peers,” he added before describing the different steps to adhere to the scheme in terms of documentation, fees, and more.
Carole Schmidt then took the stage to conclude this part of the conference and focused on the liability rules associated with VOP under IPR. She started: “VOP requires cooperation between the Payer’s PSP and the Payee’s PSP”.
There are various scenarios, and the liability can shift between the PSPs and the Payer, depending on availability (or not) of the VOP service on each side, and on the fact that the payer actually executes the credit transfer or not. Moreover, certain situations will require additional clarifications from the European Commission, making the VOP liabilities topic more crucial than ever.
A recap of the second part of the conference, focusing on the upcoming Payments Package and on Virtual IBANs will be published in the next days.