Verification of Payee (VoP) is a payee verification service which checks if the payee details input by payer and details held by payee bank match. The name check service is initiated even before the transaction is authorised or processed.
The Verification of Payee service has been mandated for all European PSPs, EMIs and PIs which provision payment accounts as part of Instant Payment Regulation (IPR). The VoP service requires Requesting and Responding capabilities to ensure compliance with Instant Payment Regulation (IPR) and EPC VoP scheme.
In this blog, we cover details of what Responding capability is and what are key features which can help your bank achieve compliance with IPR.
What Is a Responding Capability?
The Financial Institutions enabling responding capability will be able to respond to payee verification requests. As part of TechnoXander’s VoP product, we provision Responder module so banks can validate payee information securely enabling financial institutions (FIs) to handle incoming verification requests with precision and compliance.
Let’s look at how Responding capability of TechnoXander’s VoP product works.
How Verification of Payee Responder Module Works
Emma, a small business owner in France banking with XYZ Bank, needs to send €2,500 to Stefan, a supplier in Germany banking with ABC Bank.
Here is how TechnoXander’s RVM Responder module ensures that the payment made by Emma reaches the intender recipient as well as keeps ABC Bank compliant with regulatory requirements:
- Receiving a Verification Request
The Responder Module of TechnoXander’s VoP product receives the industry-standard formatted name-verification request through a secure API where ABC Bank has partnered with TechnoXander to provision VoP capabilities.
The name-verification request is received over MTLS so sensitive data is protected at all times.
- Authenticating the Requesting Bank
Before processing the request, the Responder Module authenticates and authorises that Emma’s bank is authorised to receive payee data.
This step includes:
- Request Authentication: Ensures the request is sent by an entity authorised by a National Competent Authority in Europe.
- Authorisation: Confirms that the Requesting Bank is a participant in the EPC EDS Directory and is authorised to request payee information.
To achieve authentication and authorisation quickly, we cache the EPC EDS Directory.
- Retrieving Real-Time Payee Information
The Responder module checks for the payee details held at ABC Bank. This look up can be performed by integrating directly with ABC Bank systems or through pre-uploaded account data held in Requester module’s secure DB.
The look up needs to be quick, efficient and accurate so that the requests can be processed within the execution time set by EPC scheme.
- Advanced Matching Algorithm
The Verification Mechanism encapsulated in the Responder module performs matching compare the payee details provided by Emma’s bank against Stefan’s account information held at ABC Bank. The algorithm is highly sophisticate and takes into account:
- Diacritics and Regional Variations: Diverse and different naming convention in European countries
- EPC VoP Scheme Matching Rules: Aligns with the matching guidelines proposed by EPC and other regulatory frameworks
- Generating and Returning Match Results
The module generates a result—Match, Close Match, or No Match—based on the results delivered by the matching & verification engine.
This response is shared with Emma’s bank in the industry standards in less than a second.
- Supporting Real-Time Decisions
Emma’s bank displays the result in their banking application, empowering Emma to make an informed decision about whether to proceed with the payment or abandon the journey.
Key Features of the Responder Module
The Responder Module performs authentication, authorisation, look-up, matching and sending results back in less than a second.
The module is available 24/7/365 and employs multi-region, multi availability zone setup. All deployments are orchestrated using zero touch ensuring no downtime.
The Responder Module supports multiple integration methods, making it adaptable to FIs’ existing systems. Integration options include:
- Direct API connections: for real-time payee data retrieval from core-banking system.
- Account data uploads: allowing FIs to upload data via an intuitive user-friendly portal.
Built with stringent security protocols and industry-standard encryption, the Responder Module ensures compliance with regulatory requirements, protecting sensitive customer information.
Looking for an indispensable tool which is compliant with EPC VoP regulations and IPR while providing secure and reliable payee verification services.
Contact us today at vop@technoxander.com to explore how TechnoXander’s Responder Module can transform your payment operations.
