Overcoming VOP friction in batch payments

The mandatory rollout of Verification of Payee (VOP) across the Single Euro Payments Area (SEPA) strengthens fraud prevention, but also brings potential challenges for banks and their corporate clients. In this article, XMLdation explores how the industry is working to address them.

The Instant Payments Regulation (IPR) mandates the availability of instant payment services for all PSPs across SEPA. This means that if a PSP already offers standard euro credit transfers, they must also offer instant credit transfers, available around the clock – and at the same cost as regular transfers.

In standardising and accelerating instant payments across Europe, the IPR imposes a security feature, verification of payee (VOP) – designed to reduce fraud and payment errors by verifying the recipient's account details before a payment is processed. From 9 October 2025, payment service providers (PSPs) will be required to perform VOP on all credit transfers within the SEPA.

While the lead-up to this IPR milestone requires significant effort, most PSPs should be well positioned to support the VOP process for the majority of consumer payment scenarios in time for the deadline. However, when it comes to the VOP process for corporates – especially batch payments – some significant friction lies on the horizon.

The challenge of verifying batch payments 

The systems and processes of PSPs and their corporate clients – in particular, the underlying enterprise resource planning (ERP) systems that orchestrate their payments – are unlikely to be ready to support VOP checks ahead of the deadline. Indeed, according to a recent EBA report, implementation lead times for such providers are estimated to be around 18 months – and work is only just beginning¹. 

The primary challenge comes from batch payments, which tend to be highly automated and operate on the assumption that PSPs will process incoming files without further intervention, since they are pre-approved by the client. Mandatory VOP checks, however, complicate this model – as there is currently no clear mechanism for PSPs to relay VOP feedback via the client’s channels. 

As the deadline approaches, there is a growing scramble to – at a minimum – find short-term solutions that minimise disruption and preserve the seamless, straight-through processing corporates have come to expect. So, how can PSPs effectively communicate match results back to corporate clients within the existing infrastructure?

Pain.002 reports: A promising solution

One way for banks to provide VOP feedback to corporates is via pain.002 payment status reports, which are typically used to communicate the status of payment initiation messages (pain.001). Banks are considering adapting these reports to include VOP match outcomes – offering a familiar and structured channel for corporates to receive and act on feedback.

If pain.002 reports are updated for VOP, banks will need to work with their corporate clients to ensure they are prepared to interpret or act on VOP feedback delivered in this format. Without this, there’s a risk that the friction banks aim to resolve will simply be shifted elsewhere in the process.

XMLdation, for its part, offers a service that allows clients to upload test pain.001 files and receive simulated pain.002 responses that incorporate VOP results. This will help corporate clients understand and adjust to how VOP outcomes will be handled within batch payment processes.

As the October 2025 deadline approaches, proactive collaboration between banks, corporates, and technology providers will be key to ensuring a smooth transition to VOP. By leveraging the existing structure of pain.002 reports and beginning testing now, PSPs and their clients can transform a looming compliance hurdle into an opportunity to enhance payment security – without compromising operational efficiency.

1) https://www.abe-eba.eu/market-practices-regulatory-guidance/practitioners-group-on-instant-payments/