VOP is a regulatory requirement that must be complied with by Eurozone PSPs by October 2025. Over the past few months, the clarity on the VOP has improved and several vendors including RVMs have offered VOP solutions. 90% of the scheme participants are expected to use RVMs and are likely to “Buy”. Though most major banks have already made a decision, some of them who have started their “Build” recently are reevaluating their decision and are considering “Buy”.
Benefits of BUILD
- Strategic Control
- PSPs want full control over their feature roadmap. Custom systems allow PSPs to create innovative features that address specific customer needs
- Rapidly implement new requirements without waiting for vendor updates
- Risk Management and Control
- PSPs face strict regulatory requirements and need granular control over how their systems handle sensitive data
- Building in-house provides complete visibility into security measures and data handling, as well as aligning with internal security policies
- Ease of Integration
- Large PSPs often have complex legacy systems that require deep integration
- Custom solutions can be built to work seamlessly with existing infrastructure
- Data Security
- PSPs prefer to maintain direct control over customer data
- Custom systems allow them to keep sensitive data in-house and within specific jurisdictional boundaries
- Cost / Economies of Scale to build and operate
- For very large PSPs, building and maintaining this solution can be more cost-effective than paying per-transaction SaaS fees
- PSPs can optimize infrastructure costs and avoid vendor lock-in
Benefits of BUY
- Efficient management of changes
- Based on our experience with other similar schemes, we expect the VOP service to continuously evolve for the next 2-3 years. Till that time, we expect frequent and at times, complex changes to the specifications, rulebook and introduction of market-driven additional optional service (AOS). An agile VOP RVM community is ideally positioned to handle such circumstances.
- Industry best practices
- Vendors with prior experience in similar solutions aggregate learning and best practices from earlier implementation and multiple PSPs
- PSPs benefit from collective experience of the RVM in handling regulatory requirements
- Reduces the risk of compliance gaps or implementation errors
- Efficient management of overheads
- Procurement of eIDAS certificate and renewal, functional conformance tests, regulatory reporting are examples of such overheads that vendors are generally better placed to handle them more efficiently
- Post GoLive support
- Post-production maintenance of the software requires managing support tickets from hundreds of participants, and this is tedious. Vendors that work with multiple customers are in a better position to quickly identify and react to incident-wide changes and incidents
- Cost predictability
- Fixed fee pricing models of vendors provide better cost predictability without worrying about ongoing investment to maintain and update system
- Sharing infrastructure costs across multiple PSPs leads to economies of scale for vendors
Future of VOP and the BUILD vs BUY decision
Verification of Payee is expected to evolve beyond simple name matching required by current regulations. Future frameworks will incorporate multiple data points and requirements to strengthen fraud prevention: Business Identity Matching, Account age, Transaction pattern (size & volume), Currency and business types, Sharing of suspicious account information, etc. The “Authorised Push Payment” fraud is likely to burst out with the IPR mandate in October 2025. While Payment Service Providers (PSPs) have historically preferred developing custom software solutions, the complex and evolving nature of Verification of Payee makes a strong case for partnering with established partners/ RVMs. A dedicated and active RVM partner can help PSPs efficiently navigate the evolution of Verification of Payee in the future.
Choosing the right vendor
However, PSPs should carefully evaluate potential vendors based on:
- Proven track record in delivering similar services
- Experience in supporting banks and PSPs of your size and nature
- Strong product roadmap to support future evolution of fraud and risks, including cross-border checks
- Robust security and compliance frameworks
- Deployment options (SaaS/On-premise/Hybrid) offered that align with PSP’s security framework
- Robust service level agreements and support mechanisms
By choosing a reputable VOP vendor with an agile development approach, PSPs can achieve a balanced solution that maintains necessary control while leveraging external expertise and shared resources.
Let us Connect!
Get in touch with Banfico for more information on VOP or register for one of our breakfast events across Europe this March by using the link below.
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