A new verification of payee service will be implemented by all banks operating in Cyprus and the SEPA zone in October 2025, aiming to enhance the security of electronic payments.

The Association of Cyprus Banks said the VoP service is part of the European strategy for the unification and security of payments across Europe, requiring payment service providers to offer mechanisms that verify the match between the beneficiary’s name and the corresponding IBAN before executing a money transfer.

They added that this will allow citizens and businesses to know with greater certainty that the funds they send are directed to the intended recipient.

The association said the verification process will be completed within seconds, will apply to both standard and instant euro payments, will be implemented across all SEPA countries, and will cover both natural and legal persons.

They added that the VoP service will be provided free of charge to customers for both standard and instant payments.

Under the new system, when a customer initiates a payment through internet or mobile banking, they enter the IBAN and the beneficiary’s name as usual.

At this point, the VoP service is activated and checks whether the details entered by the payer match the records held by the beneficiary’s bank.

Depending on the verification result, the payer may receive different responses.

A full match indicates that the name entered by the payer matches the name held by the beneficiary’s bank, allowing the payment to proceed normally without reservation.

A close match occurs when there is significant similarity but not a complete match, for example due to spelling errors or a different order of words.

In this case, the payer receives a warning with a suggested correct name and is asked to confirm whether they wish to proceed with the payment.

A no match result means the name entered by the payer does not agree with the IBAN details in the bank’s database, and the payer is strongly warned that the payment may not reach the intended recipient and should recheck the details before continuing.

If verification is not possible, this may be due to a technical issue, an inactive account, or non-response from the beneficiary’s bank.

In such cases, the payer is informed that the accuracy of the beneficiary’s details cannot be confirmed and must assess the risk before proceeding.

The European Payments Council, based in Brussels and specialising in electronic payments, played a key role in the development and introduction of the VoP service, while also providing educational material to inform banks, businesses and the public, the Association said.

The association said the introduction of VoP increases trust in electronic transactions and reduces the risk of errors that could lead to delays or financial losses.

They added that it also strengthens protection for businesses and consumers against fraud through misleading practices.

They also said that Cypriot banks are working intensively on the necessary technical adjustments so that the service will be available through all channels used for SEPA payments by October 2025.

The association concluded by saying that the transition to a safer payments environment is a strategic priority for the Cypriot banking system, which actively supports EU initiatives to create a unified, fast and reliable payments market.