What is the VoP mandate in Europe and how does it impact PSPs?

Europe is at the forefront of advanced identity protection measures within the digital ecosystem. An example is the recent introduction of Regulation (EU) 2024/1183, which establishes the “EU Digital ID Wallet”. This initiative aims to provide individuals with means to securely store and validate identification data and electronic statements. This regulation seeks to offer all EU residents accessible and secure digital identities, making it safer to access various online services and protecting against cybersecurity risks.

In line with strengthening security in digital processes, the European Payments Council (EPC) has developed the VoP (Verification of Payee) mandate, aiming to set a new benchmark in payment security. While this mandate initially originated for Europe, its benefits are not limited to the region and may have a global impact.

This new regulation requires Payment Service Providers (PSPs) to implement Beneficiary Verification services to enhance the security of credit transfers.

With VoP, PSPs must offer their customers the ability to verify beneficiary names before making a payment, with any inconsistencies triggering an alert to the payer.

Additionally, this mandate stipulates that PSPs will be held responsible for the execution of incorrect or faulty payments due to their failure to offer a VoP service.

Thus, VoP aims primarily to enhance payment security and reduce fraud risk. By verifying names before authorizing a payment, VoP serves as an additional layer of security against fraud, significantly reducing economic losses and enhancing the customer experience.

The goal is for all PSPs operating in euros to have implemented this measure by October 2025, and those operating in other currencies to do so by July 2027.

Thanks to this mandate, Payment Service Providers will need to integrate VoP into their banking channels, develop integration with their core systems, and carefully manage communication with customers to reduce liability risks. Furthermore, while any errors in credit payment currently fall on the payers, with VoP, the responsibility shifts to the PSPs, providing an additional layer of security for fintechs specializing in credits or loans.

As providers of technological infrastructure, at Prometeo, we have developed Bank Account Verification, a solution that aligns with VoP requirements by allowing a company to verify that the beneficiary data for a payment is correct and genuine.

With Account Verification, companies such as PSPs have the technology to prevent incorrect or fraudulent payments, reducing economic and reputational losses.

Currently, this solution is available in 6 Latin American countries and will soon be available in the United States and Europe, allowing more companies to enhance the security of their processes while complying with regional regulatory standards.

If you want to learn more about Prometeo and this solution, contact us and discover what our API can do for your company.