Instant Payments Regulation Update

The Instant Payments Regulation introduces new requirements for payment service providers across the EU. From 9 October 2025, providers in the Eurozone must offer a free “Verification of Payee” service, allowing payers to check a payee’s name and IBAN before transfers are authorised. Our Financial Regulation and Fintech teams examine the implications for providers ahead of the deadline.

The Instant Payments Regulation (IPR)[1] entered into force in 2024 and introduced new mandatory requirements for payment service providers (PSPs) relating to instant credit transfers in euros, verification of payees and sanctions screening.

The IPR applies on a staggered basis and has a number of key implementation deadlines. PSPs including electronic money institutions (EMIs) and payment institutions (PIs) must, from 9 October 2025, offer a “Verification of Payee” (VOP) service to payment service users (PSUs).

What is the IPR?

The IPR aims to accelerate the roll-out of ‘instant’ credit transfers in Europe, ie a transfer that is executed immediately, 24 hours a day, on any calendar day.

The IPR provides that PSPs who offer a payment service of sending and receiving ‘credit transfers’ to PSUs in EU Member States in the Eurozone, are required to also offer PSUs a payment service of sending and receiving ‘instant credit transfers’. This means that PSUs must be permitted to send or receive euro-denominated instant credit transfers through all the channels that they can use to place non-instant credit transfers, e.g., via online banking, mobile applications, ATMs or in a branch. In addition, any charges levied on PSUs by a PSP for instant credit transfers must not be higher than the charges imposed for other credit transfers.

Verification of Payee service

The IPR requires PSPs to offer a free-of-charge VOP service for both instant and non-instant credit transfers. The VOP service will allow payers to verify a payee’s name and IBAN prior to authorising a transfer, to mitigate the risk of fraud. Non-consumer PSUs may waive this VOP service but must be allowed to opt back into the service at any time.

VOP will allow the payer’s PSP to instantly send to the payee’s PSP:

• A request to verify the payee’s name and IBAN as given to the payer, or
• An identification code identifying the payee, eg a VAT number or Legal Entity Identifier (LEI).

The payee’s PSP will instantly verify whether the received data matches the data it has registered for that payee and provide a VOP response, eg ‘match’, ‘no match’, ‘close match’, or ‘other’. The payer’s PSP will then pass this response to the payer.

A VOP Scheme Rulebook has been developed by the European Payments Council to support PSPs in SEPA. PSPs will be required to comply with VOP requirements as outlined in the IPR.

There is no staggered implementation timeline for VOP requirements. They will apply from 9 October 2025 to all PSPs in Member States whose currency is the euro, including EMIs and PIs. PSPs located outside the Eurozone are not required to provide the VOP service until 9 July 2027.

Conclusion

PSPS required to offer the VOP service should ensure that they are in a position to comply with the requirements of the IPR before the implementation deadline in October 2025.

Please reach out to a member of our Financial Regulation or Fintech teams should you require advice and support in this area.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] Regulation EU 2024/886 as regards instant credit transfers in euro