Understanding verification of payee: safeguarding payment transactions

In the last few years, the terms “Confirmation of Payee”, “IBAN name check” and currently also the term “Verification of Payee” have gained traction in public discussions. What exactly do these terms mean for payment transactions?

Ensuring the verification of recipient data

With the introduction of the International Bank Account Number (IBAN), it was commonly deemed satisfactory by the ordering bank to execute the payment and by the recipient banks to credit the transfer amount to the beneficiary’s account, relying on this provided IBAN.

Given the recent surge in fraud cases, it has become crucial to ensure the verification of recipient data (including account number and recipient name) before initiating any payment transactions.

The verification process

The terms “Confirmation of Payee”, “IBAN name check” and “Verification of Payee” mean exactly the same thing and stand for the verification process outlined: validation of the existence of the payee and ensuring the accuracy of their account number to confirm their association.

The forthcoming feedback forms from the beneficiary bank are not yet fully defined, but the anticipated categories include “match”, “partial match”, “no match” or “unknown”. The handling of the different “partial match” cases (for example missing hyphens in names, special characters, typos, etc.) requires further analysis. Determining liability in cases of execution despite these warnings is also a crucial aspect to be addressed.

Take part in the EPC survey

The European Payments Council (EPC) would like to create a generally applicable standard for this verification. They are therefore conducting a public consultation between 20 February and 19 May 2024. All stakeholders are invited to take part in this survey.

The details can be consulted here.

We strongly encourage your participation.