Verification of Payee successfully implemented across Luxembourg’s financial sector

A well-prepared sector

The Verification of Payee automatically checks whether the recipient’s name matches their IBAN before a transfer is executed. Introduced under the European Commission’s Instant Payments initiative, this mechanism is designed to reduce the risk of fraud and misdirected payments.

Key challenges included upgrading infrastructures for 24/7 real-time transactions, ensuring continuous liquidity management, maintaining real-time compliance with anti-money-laundering and sanctions rules, and reinforcing cybersecurity in a permanently active environment.

According to Galina Miroshnichenko, Payments and Digital Adviser at the ABBL, who coordinated the project, “Initial feedback from Luxembourg banks and from LuxHub shows that implementation was overall well managed. The only significant—but non-blocking—difficulties concern transfers to foreign countries whose readiness levels were lower than Luxembourg’s.”

Building consumer confidence

Early feedback collected by the ABBL shows encouraging initial results since the launch of the Verification of Payee.

• 60% of transfers result in a Match;
• 19% in a Close Match;
• 14% in a No Match;
• 7% in Verification not possible cases.

These figures largely depend on how accurately payment beneficiaries are recorded by users. The ABBL therefore encourages consumers to review and update their beneficiary lists to ensure smoother transfers in the future and to reduce the likelihood of mismatches. 

As Ananda Kautz reminds, “The Verification of Payee is a major step forward for transfer security, but it cannot replace vigilance. Good habits remain the best protection against fraud.”