Payments Training Hub
Verification of payee before sending 1 NOW Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 Stopped Verification of payee is a check that runs before a payment is sent, and it compares the payee name the customer entered with the name held on the payee account. Step 1 of 6 Verification of payee before sending 1 NOW Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 Stopped Verification of payee is a check that runs before a payment is sent, and it compares the payee name the customer entered with the name held on the payee account. Step 1 of 6
Proceeding after a mismatch warning 1 Verification of payee before sending 2 NOW Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 Stopped The customer can still proceed after a mismatch in most schemes, but the warning creates a record that the customer was told. Step 2 of 6 Proceeding after a mismatch warning 1 Verification of payee before sending 2 NOW Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 Stopped The customer can still proceed after a mismatch in most schemes, but the warning creates a record that the customer was told. Step 2 of 6
Verification of payee in the UK 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 NOW Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 Stopped In the United Kingdom, verification of payee has been mandatory for major banks since 2020, Step 3 of 6 Verification of payee in the UK 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 NOW Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 Stopped In the United Kingdom, verification of payee has been mandatory for major banks since 2020, Step 3 of 6
It clarifies liability 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 NOW It clarifies liability 5 Banks and payment providers 6 Stopped It also clarifies liability, so when a bank fails to perform the check and the money goes to the wrong account, the customer has a stronger claim. Step 4 of 6 It clarifies liability 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 NOW It clarifies liability 5 Banks and payment providers 6 Stopped It also clarifies liability, so when a bank fails to perform the check and the money goes to the wrong account, the customer has a stronger claim. Step 4 of 6
Banks and payment providers must share fraud 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 NOW Banks and payment providers 6 Stopped Under PSD3, banks and payment providers must share fraud related information with each other, so that when one bank identifies a mule account, other banks can block payments to it. Step 5 of 6 Banks and payment providers must share fraud 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 NOW Banks and payment providers 6 Stopped Under PSD3, banks and payment providers must share fraud related information with each other, so that when one bank identifies a mule account, other banks can block payments to it. Step 5 of 6
Customer: stopped 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 NOW Stopped When a payment is stopped, the customer must be told in plain language why, what to check, and how to proceed safely. Step 6 of 6 Customer: stopped 1 Verification of payee before sending 2 Proceeding after a mismatch warning 3 Verification of payee in the UK 4 It clarifies liability 5 Banks and payment providers 6 NOW Stopped When a payment is stopped, the customer must be told in plain language why, what to check, and how to proceed safely. Step 6 of 6

Flow of the explanation in this lesson.

0:00 / 2:48 Step 1 of 6

Verification of Payee and Fraud Information Exchange

Open Banking, PSD2 and PSD3, Lesson 6 of 7, Narration 2:48, D10 APIs and integration

IBANPSD3

What you will learn

Your objective. By the end of this lesson, you will be able to explain verification of payee and fraud information exchange. Verification of payee is a check that runs before a payment is sent, and it compares the payee name the customer entered with the name held on the payee account.

Why it matters. For a business analyst, the requirement is not just a check box, it is a full journey, the name entry screen, the match result screen, the warning wording, and the audit record of what the customer saw and chose.

Chapter objective: How regulated access to bank accounts changed payments

Key learning points

  • Verification of payee before sending
  • Proceeding after a mismatch warning
  • Verification of payee in the UK
  • It clarifies liability
  • Banks and payment providers must share fraud
  • Customer: stopped

Key terms

IBAN: An international bank account number that identifies a customer account in a standard format across countries.

PSD3: Payment Services Directive 3, the proposed successor to PSD2 that updates European payment rules, strengthens fraud controls, and clarifies open banking access.

API request and response viewer showing Verification of Payee and Fraud Information Exchange.

Practise this lesson

Exercise

Decide what the screening or monitoring outcome should be for the scenario in this lesson.

Use the lists, rules and thresholds in this lesson.

  1. What to do. State whether the payment is stopped, held, frozen or released, and what must be recorded for audit.

Correct result. A true match against a sanctions list stops the payment. A false positive is cleared with a reason recorded. An alert that is escalated becomes a case, and a case that meets the threshold becomes a suspicious activity report.

Why. Screening is a control, not a suggestion. A missed true match is a regulatory breach, and an unexplained clearance is an audit finding.

Check your understanding

Practice question

Which of the following best describes verification of payee and fraud information exchange?

Takeaway and next step

What to remember

For a business analyst, the requirement is not just a check box, it is a full journey, the name entry screen, the match result screen, the warning wording, and the audit record of what the customer saw and chose.

Call the API described in this lesson with a valid request, then with a missing field, and compare the responses.

Open the API Playground →

Builds on "Fraud Prevention Under PSD3 and Customer Education".

Transcript and full text

Show transcript

Verification of payee is a check that runs before a payment is sent, and it compares the payee name the customer entered with the name held on the payee account. If the names match, the customer gets a match confirmation and can proceed. If they are close, for example a spelling difference or a missing middle name, the customer gets a close match message showing the correct name, and can decide whether to proceed. If they do not match at all, the customer gets a mismatch warning and is asked to check the details, because the money could go to the wrong person or to a criminal. The customer can still proceed after a mismatch in most schemes, but the warning creates a record that the customer was told. The check matters because most payment fraud depends on the customer typing a name they trust and an account number the criminal controls. A criminal who sends a fake invoice uses the real supplier name but a criminal account number, so the name check exposes the mismatch and stops the payment. The check also catches honest mistakes, such as a transposed digit in an IBAN that points to a different person, or a payment sent to a company that changed its legal name after a merger. In the United Kingdom, verification of payee has been mandatory for major banks since 2020, and the Instant Payments Regulation extends a similar verification duty across the euro area, so the check is becoming a standard part of every payment. Verification of payee for instant euro payments already comes from the Instant Payments Regulation, Regulation (EU) 2024/886, mandatory in the euro area from 9 October 2025. The PSR verification of payee duty for all credit transfers would apply about 27 months after the PSR enters into force, around the first half of 2029, and would make the rules more consistent across countries. The regulation requires payment service providers to offer verification for credit transfers, to show the result clearly to the customer, and to handle cases where the payee is a legal person with a trading name that differs from the registered name. It also clarifies liability, so when a bank fails to perform the check and the money goes to the wrong account, the customer has a stronger claim. For a business analyst, the requirement is not just a check box, it is a full journey, the name entry screen, the match result screen, the warning wording, and the audit record of what the customer saw and chose. Fraud information exchange is the other half of the defence, because a criminal account is often used against many victims at many banks. Under PSD3 as agreed, banks and payment providers would have to share fraud related information with each other, so that when one bank identifies a mule account, other banks can block payments to it. The exchange uses secure channels, carries only the data needed to prevent fraud, and follows data protection rules, so a bank shares the account identifier and the fraud type, not the full customer history. This sharing turns fraud prevention from a single bank problem into a network problem, and it is one of the most important agreed changes in PSD3 for a payments professional to understand. When a payment is stopped, the customer must be told in plain language why, what to check, and how to proceed safely. A worked example shows verification of payee in action. A customer pays EUR 1,000 to a supplier, entering the supplier name and account number. The bank checks the name against the account through verification of payee and finds a close match: the name is correct but the spelling differs by one letter. The bank tells the customer the name is a close match and asks whether to proceed. The customer confirms the supplier and the payment goes through. If the name had not matched at all, the bank would have warned the customer that the name does not match the account, and the customer could have checked the details before sending. Verification of payee is required for instant euro payments in the euro area from 9 October 2025 under Regulation (EU) 2024/886, and the PSR verification of payee duty for all credit transfers applies about 27 months after the Payment Services Regulation enters into force, around the first half of 2029. For a business analyst, the requirement is to define the verification of payee flow, the match, close match and no match responses, and the customer warning for each. A failure scenario tests the no match case. A customer pays EUR 10,000 to an account, and verification of payee returns no match: the name does not correspond to the account at all. The bank warns the customer and asks whether to proceed. The customer proceeds anyway, because they are in a hurry and assume the details are correct. The payment goes to the wrong account, and the customer must ask the bank to recall it. The bank sends a camt.056 recall request, but the beneficiary has already spent the money, so the recall fails. The customer loses EUR 10,000. The lesson is that a warning is only effective if the customer heeds it, and the bank must make the warning clear and must record that the customer proceeded despite it. A bank that does not warn the customer, or that warns in a way the customer cannot understand, is liable. Last reviewed 7 November 2026. Further reading: Regulation (EU) 2024/886; PSD2 Directive (EU) 2015/2366; UK Payment Systems Regulator verification of payee requirements. Worked example with numbers: a customer types a supplier name and an account number for a EUR 2,400 invoice, and verification of payee compares the name the customer entered with the name held on the payee account. If the names match, the customer gets a match confirmation and can proceed. If they are close, for example the customer typed Smith Ltd and the account holds Smith Limited, the customer gets a close match warning and must confirm. If they do not match, the customer gets a no match warning, and must check the details before proceeding. A criminal who sends a fake invoice uses the real supplier name but a criminal account number, so the name check exposes the fraud, because the account number does not belong to the supplier the customer trusts. Failure and recovery: verification of payee fails when the name is spelled differently, when the account is held in a different name, or when the check is not run at all. If the customer types a nickname instead of the legal name, the check returns a close match, and the customer must decide whether to proceed, which is a decision the customer may get wrong. If the check is not run, because the payment is not an instant euro payment and the bank has not yet rolled out the check, the customer has no warning, and the fraud succeeds. The recovery for a failed check is a clear warning and a route to verify the payee by another method, such as calling the supplier on a known number, because a warning that the customer ignores is a warning that has failed. For a business analyst, product owner or subject matter expert, the verification of payee requirement must state the three outcomes, match, close match and no match, and must state what the customer sees for each one. The requirement must also state that verification of payee for instant euro payments already comes from Regulation (EU) 2024/886, mandatory in the euro area from 9 October 2025, while the wider PSR duty for all credit transfers would apply about 27 months after entry into force, around the first half of 2029, and PSD3 is agreed but not yet law. The test pack must include a match, a close match, a no match, and a payment where the check is not run, because each case exercises a different part of the rule. Source: Regulation (EU) 2024/886; PSD2; last reviewed 7 November 2026.

Verification of payee is a check that runs before a payment is sent, and it compares the payee name the customer entered with the name held on the payee account. If the names match, the customer gets a match confirmation and can proceed. If they are close, for example a spelling difference or a missing middle name, the customer gets a close match message showing the correct name, and can decide whether to proceed. If they do not match at all, the customer gets a mismatch warning and is asked to check the details, because the money could go to the wrong person or to a criminal. The customer can still proceed after a mismatch in most schemes, but the warning creates a record that the customer was told.

The check matters because most payment fraud depends on the customer typing a name they trust and an account number the criminal controls. A criminal who sends a fake invoice uses the real supplier name but a criminal account number, so the name check exposes the mismatch and stops the payment. The check also catches honest mistakes, such as a transposed digit in an IBAN that points to a different person, or a payment sent to a company that changed its legal name after a merger. In the United Kingdom, verification of payee has been mandatory for major banks since 2020, and the Instant Payments Regulation extends a similar verification duty across the euro area, so the check is becoming a standard part of every payment.

Verification of payee for instant euro payments already comes from the Instant Payments Regulation, Regulation (EU) 2024/886, mandatory in the euro area from 9 October 2025. The PSR verification of payee duty for all credit transfers would apply about 27 months after the PSR enters into force, around the first half of 2029, and would make the rules more consistent across countries. The regulation requires payment service providers to offer verification for credit transfers, to show the result clearly to the customer, and to handle cases where the payee is a legal person with a trading name that differs from the registered name. It also clarifies liability, so when a bank fails to perform the check and the money goes to the wrong account, the customer has a stronger claim. For a business analyst, the requirement is not just a check box, it is a full journey, the name entry screen, the match result screen, the warning wording, and the audit record of what the customer saw and chose.

Fraud information exchange is the other half of the defence, because a criminal account is often used against many victims at many banks. Under PSD3 as agreed, banks and payment providers would have to share fraud related information with each other, so that when one bank identifies a mule account, other banks can block payments to it. The exchange uses secure channels, carries only the data needed to prevent fraud, and follows data protection rules, so a bank shares the account identifier and the fraud type, not the full customer history. This sharing turns fraud prevention from a single bank problem into a network problem, and it is one of the most important agreed changes in PSD3 for a payments professional to understand. When a payment is stopped, the customer must be told in plain language why, what to check, and how to proceed safely.

A worked example shows verification of payee in action. A customer pays EUR 1,000 to a supplier, entering the supplier name and account number. The bank checks the name against the account through verification of payee and finds a close match: the name is correct but the spelling differs by one letter. The bank tells the customer the name is a close match and asks whether to proceed. The customer confirms the supplier and the payment goes through. If the name had not matched at all, the bank would have warned the customer that the name does not match the account, and the customer could have checked the details before sending. Verification of payee is required for instant euro payments in the euro area from 9 October 2025 under Regulation (EU) 2024/886, and the PSR verification of payee duty for all credit transfers applies about 27 months after the Payment Services Regulation enters into force, around the first half of 2029. For a business analyst, the requirement is to define the verification of payee flow, the match, close match and no match responses, and the customer warning for each.

A failure scenario tests the no match case. A customer pays EUR 10,000 to an account, and verification of payee returns no match: the name does not correspond to the account at all. The bank warns the customer and asks whether to proceed. The customer proceeds anyway, because they are in a hurry and assume the details are correct. The payment goes to the wrong account, and the customer must ask the bank to recall it. The bank sends a camt.056 recall request, but the beneficiary has already spent the money, so the recall fails. The customer loses EUR 10,000. The lesson is that a warning is only effective if the customer heeds it, and the bank must make the warning clear and must record that the customer proceeded despite it. A bank that does not warn the customer, or that warns in a way the customer cannot understand, is liable. Last reviewed 7 November 2026. Further reading: Regulation (EU) 2024/886; PSD2 Directive (EU) 2015/2366; UK Payment Systems Regulator verification of payee requirements.

Worked example with numbers: a customer types a supplier name and an account number for a EUR 2,400 invoice, and verification of payee compares the name the customer entered with the name held on the payee account. If the names match, the customer gets a match confirmation and can proceed. If they are close, for example the customer typed Smith Ltd and the account holds Smith Limited, the customer gets a close match warning and must confirm. If they do not match, the customer gets a no match warning, and must check the details before proceeding. A criminal who sends a fake invoice uses the real supplier name but a criminal account number, so the name check exposes the fraud, because the account number does not belong to the supplier the customer trusts.

Failure and recovery: verification of payee fails when the name is spelled differently, when the account is held in a different name, or when the check is not run at all. If the customer types a nickname instead of the legal name, the check returns a close match, and the customer must decide whether to proceed, which is a decision the customer may get wrong. If the check is not run, because the payment is not an instant euro payment and the bank has not yet rolled out the check, the customer has no warning, and the fraud succeeds. The recovery for a failed check is a clear warning and a route to verify the payee by another method, such as calling the supplier on a known number, because a warning that the customer ignores is a warning that has failed.

For a business analyst, product owner or subject matter expert, the verification of payee requirement must state the three outcomes, match, close match and no match, and must state what the customer sees for each one. The requirement must also state that verification of payee for instant euro payments already comes from Regulation (EU) 2024/886, mandatory in the euro area from 9 October 2025, while the wider PSR duty for all credit transfers would apply about 27 months after entry into force, around the first half of 2029, and PSD3 is agreed but not yet law. The test pack must include a match, a close match, a no match, and a payment where the check is not run, because each case exercises a different part of the rule. Source: Regulation (EU) 2024/886; PSD2; last reviewed 7 November 2026.

Full lesson text (all scenes)

Completing a lesson updates your progress dashboard on the homepage.

Scene timestamps are estimated by allocating the narration text proportionally across the real audio length. The audio playback position is the source of truth: pause freezes the visual, seeking restores the correct scene, replay restarts the scene animation.