Security, trust and user experience: why VoP is a strategic project for PSPs

The Verification of Payee obligation was introduced in the Instant Payments Regulation which entered into force in early April. If many PSPs are currently putting their focus on the deployment of instant payments, which have to be implemented by January 2025 for the reception and 9 months later for the execution, they should not overlook the importance of VoP implementation. Here’s why.

“The Instant Payments Regulation, or IPR, stands as a landmark regulation aimed at revolutionizing the speed and efficiency of credit transfers within the European Union. It imposes Payment Service Providers the deployment of instant payments as well as additional obligations,” explains Claude Meurisse, CEO of LUXHUB.

Several obligations with different deadlines are imposed on European Payment Service Providers, the first one being the ability to receive instant payments by January 2025. And in 18 months, which brings us to October 2025, they will have to be in the position of sending instant credit transfers. The October 2025 deadline coincides with the obligation to support the Verification of Payee, which aims at avoiding credit transfers going into the wrong account, due to fraud or error.

The CEO of LUXHUB adds: “the prioritization is obviously logical. Yet, we believe that it is important for PSPs to get started as soon as possible with their VoP project and consider it strategic in their development”.

Why VoP matters

More security and trust in payments. The deployment of VoP will significantly help reduce the fraud cases, particularly in the context of instant payments. Through a consistent user experience and with less mistakes, VoP will also reassure clients who will be able to (instantly) transfer funds to the right recipient. On the PSPs’ side, the ones not supporting VoP run the risk of being liable in the event of credit transfers initiated to an unintended beneficiary, but also to be particularly targeted by fraudsters.

Ensure a smooth user experience. The way VoP will be provided through the different payment initiation channels will be key to its success (or failure). On the one hand, PSPs should consider the UX as a key aspect of the project in order to avoid confusion and potential mistrust from their customers. On the other hand, starting to inform the customers and potentially deploying the system gradually before October 2025 will enable customers to get used to the service and adopt it in their normal payment initiation journey.

Why start now?

As explained earlier, this new obligation will have to be fulfilled by PSPs, by October 2025. With the appropriate support and after a thorough analysis, launching the VoP project will entitle them to:

• Benefit from frontrunner & innovator image in the market
• Kickstart typically lengthy legal, compliance and technical discussions
• Start iterating on the future payment initiation channels’ user experience and product adjustments
• Answer to existing monetization opportunities

A VoP project implementation plan

As with any strategic project, Verification of Payee should ideally follow several key points to ensure its successful implementation (as well as its compliance with IPR).

LUXHUB, leveraging its payments and connectivity expertise, has developed the Payee Verification Platform. The development project started several months ago, as soon as the first drafts were published by the European Commission, allowing the LUXHUB team to think through the different features, and provide the PSP with the best tool possible.

Depending on the type of PSP, its size, systems and the type of customers, VoP project can present different kind of challenges. We therefore strongly advise to put in place a VoP project implementation plan as soon as possible. We have developed one based on industry feedback over the last months, which is available in our e-book and shall be adapted to your institution.

We are determined to support Payment Service Providers in this new regulatory challenge, by providing them with a powerful Payee Verification Platform

Claude Meurisse

download our Instant Payments & Verification of Payee e-book