Regulatory Mandate
Article 5c.1 of IPR states: The payer’s PSP shall offer the service ensuring verification regardless of the payment initiation channel used by the payer to place a payment order for the credit transfer.
EU regulation defines ‘Payment initiation channel’ as “any method, device or procedure through which payers can place an order with their PSP for a credit transfer.
So, a VOP check needs to be performed for payments initiated through non-electronic payment orders or what can be loosely termed offline channels. These include payment orders submitted using phone, fax, email, ATM, and paper-based forms.
Such non-electronic payment orders are executed by the payment operations team of the payer’s PSP using a system that is exclusively used by the payment institution’s internal users.
Thumb rule: The payer when providing payment instruction in real-time to the PSP channels, should be offered VOP service
Challenges involved
- Legacy systems with complex architecture that haven’t undergone a digital transformation that is not easy to integrate with the VOP API
- Changes to systems to handle the various VOP responses and errors/exceptions and modifications to the payment workflow may be expensive
- There is a need to record, and audit trail the interaction between the PSP and the customer (PSU), and the existing system may not have a challenge to support that.
- Bulk payment orders submitted through emails or paper-based forms present additional VOP challenges & lead to frictional customer experience
Tactical Solution
- A VOP solution that includes an independent portal providing a simple UI to perform manual checks – both single and bulk manual checks shall be considered with single-sign-on support.
- A feature to capture the interactions between the PSP staff and the customer, particularly when the customer authorises transactions with the following responses: NO-MATCH, UNABLE-TO-MATCH, or CLOSE-MATCH
- Integrated analytics/ reporting feature that includes outbound VOP checks performed across all channels, including the ones that are used to initiate payments based on non-electronic payment orders
- The portal should include audit trails and also include features to record notes from customer interaction. For e.g., while on the call with a customer, the PSP staff can record the call ID and customer responses on the portal.
Let us Connect!
Are you prepared for the new regulatory requirements? Get in touch with Banfico for more information or sign-up for one of the upcoming VOP breakfast events.
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