Since the end of 2025 a new binding standard has applied to European payments that changes the handling of SEPA transfers for good. With the introduction of Verification of Payee (VoP), banks are obliged to check automatically on every SEPA transfer whether the payee given matches the IBAN on file. The aim is to reduce misdirected payments and to lower the risk of fraud in payments significantly.
At the beginning of 2026 it is already clear that the new checking logic has a noticeable effect on payment processes, accounting and cash flow management — particularly in companies with a high payment volume or complex master data.
What Verification of Payee is
Verification of Payee, also known as the IBAN name check, is an EU-wide measure that has been mandatory since 9 October 2025. The technical implementation was completed shortly before that date, so name and IBAN are now matched in real time.
The check applies to every SEPA transfer, whether it is initiated by a company or a private individual, and irrespective of the payment software or the bank used.
The traffic light principle
The result of the check is displayed immediately and follows a uniform traffic light principle:
| Response | Meaning | Effect on the payment |
|---|---|---|
| Green | Name and IBAN match | The transfer is executed automatically |
| Amber | Minor differences, such as typing errors or alternative spellings | The bank shows the payee name it holds; the payer decides whether to continue |
| Red | No match between name and IBAN | The payer decides actively whether to abandon or continue |
The response comes before the transfer is executed and is meant to put the payer in a position to make an informed decision.
How this works in detail can vary from bank to bank. As a matter of principle, however, responsibility for incorrect details lies with the payer. The bank is liable only where a match has been confirmed.
Where master data fails in practice
In companies in particular, recurring problem areas show up:
- abbreviations or missing legal form suffixes (such as “GmbH” or “AG”)
- changes of name, for companies or for individuals
- different spellings, special characters, umlauts
- outdated or incomplete master data
Example: a company is registered with its bank as “Müller & Söhne GmbH”, but the invoice says “Müller Söhne”. That difference can trigger an amber or red response — with a delay or a manual release as the result.
Effects on company processes
The VoP check has immediate operational consequences:
- Cash flow management: payment delays where names are incorrect or inconsistent
- Invoicing and accounting: consistent company names matching the bank records become essential
- Communication with suppliers and customers: clear requirements on exact spelling become more important
Companies with many suppliers, international payment flows or master data that has grown over time are particularly affected.
The benefit
Despite the initial effort of adjusting, the new rules bring clear advantages:
- fewer misdirected payments and cases of fraud
- fewer manual corrections and queries
- immediate transparency about data quality
- stronger internal control and payment processes
What companies should do now
To avoid disruption to payments, a structured approach is advisable:
- check the company name against the bank records and register it consistently
- issue invoices in full and accurately (including the legal form)
- validate supplier and customer master data regularly
- check and adjust ERP and payment software for the VoP logic
- train staff in accounting and payments
- define internal processes so that amber or red responses can be dealt with promptly
Verification of Payee is not a purely technical detail but a new standard in European payments. Companies that see to consistent master data and clear processes early reduce operational risks, protect their cash flow and benefit in the long run from more efficient payment handling.
If you have questions on implementation, on reviewing your processes or on adjusting ERP and payment structures, we are glad to help with practical expertise.