EU's Verification of Payee System Catches British Businesses Off Guard

A sweeping new European Union regulation has quietly taken effect, and British businesses making euro payments are discovering they're woefully unprepared for the changes that could disrupt their operations.

The EU's Verification of Payee (VoP) mandate, which became mandatory on 9th October 2025, now requires every euro payment to undergo a name verification check before funds can be transferred. The account holder's name must precisely match the International Bank Account Number (IBAN) before any transaction proceeds.

This represents yet another example of Brussels imposing burdensome regulations that affect British commerce, despite our departure from the European Union. UK firms conducting business with European suppliers or making euro-denominated payments now find themselves subject to EU diktat once again.

Fraud Crisis Drives Heavy-Handed Response

The regulation comes as a response to soaring authorised push payment (APP) fraud across Europe, which cost EU businesses over £2.4 billion in 2024 alone. France, Germany, and the Netherlands experienced double-digit increases in such fraud year-on-year.

Britain, which introduced its own Confirmation of Payee system in 2020, has seen APP scams account for 76% of all fraud by volume, with losses reaching £459.7 million last year. However, the UK's pragmatic approach allowed for gradual implementation, unlike the EU's typical heavy-handed mandate.

The European system affects approximately 3,000 banks, payment service providers, and fintech companies across the Eurozone, all of whom were expected to comply immediately without the sensible phase-in period Britain employed.

British Firms Face Unexpected Disruption

The verification system applies to both standard SEPA Credit Transfers and instant transfers, meaning British companies paying European suppliers or processing euro payroll could face unexpected delays and complications.

The system aims to:

• Block fraudulent supplier payments before they leave company accounts
• Prevent costly errors from incorrect IBAN entries
• Reduce payment disputes with banking partners
• Improve transparency in supplier relationships
• Enhance security during supplier onboarding

However, the system's rigid approach means legitimate payments can be flagged for minor discrepancies. A missing accent mark, abbreviated company names, or the difference between "Ltd" and "Limited" can trigger verification alerts, potentially disrupting normal business operations.

Inadequate Preparation Across the Channel

Despite the regulation's significant impact, awareness remains alarmingly low among British businesses. Many firms discovered the new requirements only when their payments began triggering verification alerts.

Small and medium enterprises without dedicated fraud prevention teams face particular challenges, as a single fraudulent transfer can freeze their liquidity for weeks. The burden falls disproportionately on these businesses, which lack the resources of larger corporations to navigate complex EU regulations.

Unlike Britain's measured approach to payment verification, the EU system provides no opt-in period or gradual implementation. British businesses must immediately ensure their systems, staff, and payment partners can interpret and respond to verification alerts.

Sovereignty Concerns Resurface

This latest development underscores ongoing concerns about European regulatory overreach affecting British commerce. Despite Brexit, UK businesses find themselves still subject to EU rules when conducting legitimate trade with European partners.

The verification system doesn't automatically block payments but introduces friction designed to prevent fraud. This creates decision points for businesses: verify, delay, or proceed with potentially flagged transactions.

For British firms, this represents another layer of European bureaucracy complicating straightforward commercial relationships that have operated smoothly for decades.

While fraud prevention remains important, the EU's typical approach of imposing blanket regulations without adequate consultation or preparation time continues to burden businesses on both sides of the Channel. British companies must now adapt to yet another European rule that affects their operations, highlighting the ongoing challenges of maintaining commercial relationships with an increasingly regulated European market.