The EU’s new Instant Payments Regulation (IPR) is reshaping how we handle payments and payment verifications.
While these changes might seem daunting at first, they offer an optimal balance between security and business efficiency — the focus today is on organisations processing large payment volumes and the impact of VOP in the payment initiations.
What do the IPR & EPC VOP Scheme refer to?
IPR
- All Payment Service Providers (PSPs) must offer verification of payee service.
- Business customers (non-consumer PSUs) can choose to “opt-out” of verification for bulk payments and opt back for VOP whenever they wish.
- PSPs must clearly communicate to the payers about the risks involved in proceeding with payments without performing VOP checks or when the VOP response is other than a “FULL MATCH”
EPC VOP Scheme on bulk checks
- In the PSU-to-PSP Space, the Requester and the Requesting PSP may agree to exchange several requests as single items individually or as a bulk VOP request.
- In the Inter-PSP Space, a VOP Request from the Requesting PSP can only be sent as a single check. Bulk is not supported within the EPC scheme.
- When PSU sends a bulk request, the VOP execution time SLA of 3 seconds starts only after the package is debulked and all field validations are successfully completed (just before the single inter PSP request is sent) and the execution time ends as soon as the response is received for that single request. Therefore SLA for instant payment of 10 seconds doesn’t apply during the verification stage.
Making it work
- VOP providers are expected to offer APIs that can accept outgoing requests as both bulk requests as well as multiple single requests
- When a payer (PSU) wants to send a bulk request, it could be sent as a single bulk request with multiple accounts, the VOP-provider can take care of the debulking and re-bulking of responses for all accounts in a single response from the payee/responding PSPs.
- The VOP provider’s solution could support the below formats to support different channels
- CSV/XLS – supplied through an API call or on the web interface
- JSON/XML in an API call
- ISO20022 PAIN.001 in an API call or manual upload on the web interface
Practical considerations for requesting PSPs:
- Handling different formats (PAIN.001, XLS/CSV, JSON/XML)
- Managing customer experience and creating a process for the pre-authorisation stage in the PSU channels. Traditionally bulk files received are in “authorised state”. If so, the instant payment SLA matters.
- Handling exceptions without disrupting the whole batch (No match, partial match, unable to match responses within the same batch)
- The responses of VOP bulk checks depend on the performance of the Responding PSPs – some PSPa accept multiple requests concurrently and others have limitations to scale on demand.
Next steps
- Review existing bulk payment volumes, number of accounts per batch, transaction types (instant v/s regular payment types)
- Evaluate VOP offerings in the market
- Finalise Customer Experience guidelines on the approach for allowing opt-outs, handling of responses other than FULL MATCH, and adherence to PSU messaging guidelines
- Draft contract clauses to protect from possible liabilities on the PSU terms & conditions.
Done right, these new requirements aren’t just another compliance box to tick — they’re an opportunity to sharpen your corporate banking offering.
To learn more about VOP channel integration, please register for our webinar
