The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
We spoke with Jose-M (Chema) Buey, Director and Global Head of Client Account Services at Deutsche Bank’s Corporate Bank, about the industry-wide go-live of Verification of Payee (VOP), the key technical and operational challenges encountered during implementation, and the early impact of VOP on payment security, customer experience, and the adoption of instant payments across Single Euro Payments Area (SEPA).
How did the VOP go-live proceed, what technical or operational challenges did you encounter during implementation, and since go-live have you observed any reduction in misdirected payments or payment errors (including any relevant figures or trends)?
The VOP go-live on October 9th was a significant industry achievement, successfully rolling out a new infrastructure across over 3,000 Payment Service Providers (PSPs) and Routing and/or Verification Mechanisms (RVMs) in a "big bang" approach.
Initial challenges included cross-RVMs connectivity issues ensuring seamless communication between different RVMs as well as incomplete or incorrect EPC Directory Service (EDS) setups where a proper configuration was crucial. Despite these, most participating PSPs and RVMs went successfully live before the regulatory deadline with minimal client impact. Over the last three months, we have observed a gradual reduction in connectivity errors and VOP NOAP (Not Applicable) responses. However, it is still too early to assess meaningful numbers regarding a reduction in payment fraud.
What are the key benefits you have observed for your organisation and your customers from using VOP?
The VOP scheme offers significant benefits, particularly for SEPA Instant Credit transfers (SCT Inst), by enhancing payment protection and fostering the adoption of new real-time payment instruments.
Benefits for our Customers:
- Retail and Private Customers: Experienced smooth integration into existing payment channels, facilitating VOP adoption with minimal disruption.
- Corporate Clients: While initial integration into automated payment flows has been more challenging, the potential for fraud reduction and enhanced security is a key benefit.
Benefits for the Banking industry:
- Reduced fraud potential: VOP helps mitigate payment fraud, especially for instant payments.
- Promotes new payment instruments: Supports the adoption of real-time payment solutions.
- Enhanced security: Provides an additional layer of payment verification.
How well was the VOP service received by your customers, and did its introduction lead to a noticeable increase in queries to your contact center?
Our primary focus as PSP during VOP implementation was ensuring business continuity for our payment business as well as full compliance with the new IPR Regulation.
Customer Reception and Contact Center Impact:
- Retail and Private Clients: Adopted VOP validations quickly, resulting in no significant increase in contact center queries.
- Corporate Clients: Experienced a noticeable increase in queries due to a lack of clarity and standardisation in the customer-to-bank space. Key concerns included:
o Opt-out procedures: How to opt-out for bulk payment files.
o Bulk VOP integration: How to integrate bulk VOP processes into existing payment flows.
o Impact of "No Match" responses: Concerns about liquidity flows if "No Match" responses were returned when using alternative names (e.g., trade names). PSPs adopted varying strategies to minimize "No Matches," which also led to additional client questions during preparation.
Are there any improvements or changes you expect for the VOP scheme to be more effective or user-friendly?
To make the VOP scheme more effective and user-friendly, particularly for corporate clients, further clarification and pan-European standardisation are probably needed in three key areas:
- Standardise VOP-In/VOP-Out indication: Implement a consistent method, such as a specific indicator in the incoming PAIN.001 message, to clearly denote whether a payment file is subject to VOP-In or VOP-Out.
- Increase flexibility for automatic processing: Allow for more flexible rules on how VOP-In payment files are automatically processed based on VOP results (e.g., automatically processing all "Match" response payments without manual intervention).
- Ensure full delivery of VOP Pain.002 response: Guarantee the complete delivery of the standard VOP Pain.002 response file to the original client payment channel, with eventual integration into client ERP/TMS systems.
Achieving these improvements will require extensive collaboration across all industry stakeholders (PSPs, Corporates, ERP/TMS providers), the EPC VOP Working Group, and relevant payment communities. This will ensure VOP becomes more widely adopted and effective for corporate clients.
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Jose-M (Chema) Buey
Jose M (Chema) Buey is Director and Head of Client Account Services within Deutsche Bank's Corporate Bank. Within this role, Chema is responsible for the overall Cash Accounts product strategy including our core DDA platforms and the associated Client Account Services to facilitate real time Treasury and API connectivity.
Prior to that, he was the Regional Head for Client Product Solutions in EMEA and occupied various management roles in the Cash Product Management organisation.
Jose has a Bachelor’s degree in Computer Engineering (graduated summa cum laude) from the University of Barcelona and has a Master in Business Administration (MBA) and Global e-Management from the ESADE Business School in Barcelona.