How can organizations ensure the integrity and traceability of every payment, minimizing human error, and strengthening internal controls?
Preventing financial losses and maintaining trust in transactions is a top priority for most corporations. There are many vulnerabilities when it comes to protecting payment processes from manipulation and fraud, and organizations are increasingly exposed to risks, such as identity theft and Business Email Compromise (BEC).
Unless you are actively tracking and inspecting vendor records, bank account numbers, and beneficiary details for every payment you make, catching fraudulent attempts is incredibly difficult. Payers being deceived into sending money to a fraudulent account has unfortunately become a more frequent occurrence and, even in carefully controlled ERP environments, beneficiary information can be manipulated before a payment is sent, or human error can result in incorrect payments.
Mitigating for this type of payment fraud and human error is essential. The need for secure, accurate, and quick payee verification is becoming increasingly urgent. Corporations need an approach that balances enhanced fraud protection with operational efficiency. At the same time, they also need to ensure compliance with the new Verification of Payees (VoP) regulatory mandate, which is coming into force from October 5, 2025.
Raising security standards through the VoP mandate
The VoP scheme sets a new standard for financial transaction security and integrity. Developed by the European Payments Council (EPC), the scheme aims to enhance the security and integrity of payments within the Single Euro Payments Area (SEPA). This regulation requires Payment Service Providers (PSPs) within the eurozone to implement verification mechanisms for all SEPA credit transfers.
Although corporations are not directly regulated by VoP, they will undoubtedly be impacted by banks and PSPs enforcing the regulations, particularly when it comes to batch payments that could be rejected because of mismatched or unverified payee details.
How the VoP scheme works
The VoP scheme ensures that the name and account details of a payee match before a payment is processed. When a payer initiates a SEPA credit transfer, the PSP sends a verification request to the payee’s PSP. The payee’s PSP checks whether the provided IBAN, name, and other identifiers match its records. A response is sent back to the payer’s PSP within 5 seconds, and ideally within 1 second, indicating:
- Match
- No match
- Close match
- Verification not possible
An alert is immediately triggered if any inconsistencies are detected. The payer can then check the transaction and correct or stop it before it’s finalized.
The VoP scheme ensures automatic authentication based on actual account ownership, decreasing the risk of operational errors and fraud. This is a huge improvement on traditional controls that might rely on manual verification or only validate IBAN.
Challenges to payee verification
There are many challenges to payee verification including a large volume of transactions and huge complexity across payment chains. Maybe you have decentralized operations, global banking relationships, and legacy infrastructure?
The payee verification process can be very inefficient and require time-consuming, manual checks, made more complicated by decentralized data and fragmented systems across an organization.
Being able to automatically and accurately verify payee details before payments are processed is a key part of an efficient defense against fraud and misdirected payments.
Adopting VoP
More than simply upgrading your security, the verification of payees should be part of a cohesive payment process.
TIS can help you take a structured approach to payee verification by integrating real-time intelligent automation into workflows. You get a more secure and efficient payment process, and also ensure compliance with the regulations. By validating data before a payment is initiated—or even transmitted—TIS enables clients to proactively address issues before they become bigger problems.
No matter your ERP landscape or banking environment, the TIS validation approach provides you with instant payee verification, both for your master data and for all your payment transactions. Implementation is fast and without interruption, due to API support. You get coverage in multiple jurisdictions, not just SEPA, and integration with global banks and data aggregators.
Expertise to future-proof global payments
When it comes to meeting the VoP mandate, take advantage of TIS expertise to strengthen your security controls, reduce errors and rejections, mitigate fraud attempts, and verify every outbound payment initiated by your enterprise against global payment information.
Regardless of your banking environment, this integrated account validation approach detects any mismatches in your payment infrastructure, significantly improving internal controls and efficiency in your financial operations and, not least, ensuring compliance with VoP regulations.
Reach out to TIS to achieve smooth and secure global payments operations.
