Verification of Payee: what makes name matching so complex?

18 / 03 / 2025

From October 9th, all SEPA Credit Transfer transactions will be subject to prior Verification of Payee (VoP). Payment Service Providers (PSPs) in the Eurozone must be prepared to handle this large volume of additional requests in a reliable manner, and IBAN name-matching is one of the important challenges to get prepared for. The companies in the Eurozone must also prepare for these new VoP requirements.

2 min.

Regulation & Compliance Banking Instant payments

What is an IBAN and Why Verify It?

An IBAN (International Bank Account Number) is a unique code that identifies a bank account internationally. In France, an IBAN FR begins with "FR" and consists of 27 characters, including a control key. It is distinct from a RIB (Relevé d'Identité Bancaire), which is a document that includes several details, such as the IBAN and the BIC. Verifying an IBAN before executing a transfer is crucial to avoid errors and prevent fraud.

Many wonder: is it dangerous to share your IBAN? Sharing an IBAN is generally not risky on its own; however, an incorrect or fraudulent IBAN can lead to financial losses. Our Verification of Payee tool for IBAN checks ensures that your transactions are carried out with reliable data.

How Does Our Tool Work?

This check mainly consists of a matching process between the provided name and the stored account holder name. The payer’s PSP is required to verify the IBAN-Name match for the beneficiary. Consequently, the IBAN-Name information supplied by the payer will be forwarded to the payee PSP to be compared against the stored account holder data, which is verified through the established KYC process. Allocation of funds for the implementation of VoP systems is essential to support these processes.

Ensuring the availability of money is critical for the successful implementation of VoP.

Such checks may sound simple, but you can find many complexities if you look closer. The following list of challenges shows why it is necessary to establish a set of sophisticated algorithms to achieve reliable and correct results.

Variations in spelling: Names can be spelled differently due to typos, misspellings, or variations in transliteration, especially in multicultural or multilingual contexts.
Aliases, titles, and nicknames: People often have official titles like “Dr.” or use aliases/ nicknames that may not be directly related to their legal names, complicating the matching process.
Cultural differences: Cultural naming conventions vary widely, leading to challenges in matching names across diverse cultures. For example, the order of given names and surnames varies between Western and Eastern cultures.
Missing, incorrect or incomplete data: Incomplete, missing, incorrect or outdated records, duplicates, and inconsistencies can make it difficult to accurately match names.
Homographs: Names that are spelled the same but have different pronunciations or meanings (homographs) can lead to confusion and inaccurate matches.
Contextual ambiguity: Names may have different meanings or refer to different entities depending on the context. For example, the name “John Smith” could refer to multiple individuals, making it difficult to accurately match without additional context.
Cultural biases: Name matching systems may inadvertently exhibit biases towards certain names or cultural backgrounds, leading to disparities or inaccuracies in matching results.
Name changes: Individuals may change their names due to marriage, divorce, or other life events, resulting in multiple names associated with the same person.

PSPs will need to be able to manage these types of complexities to have reliable IBAN-Name matching capabilities. Some of these obstacles could be solved by activities like data cleaning or usage of additional data sources like nickname list, others will need a more advanced approached like the usage of Artificial Intelligence. The verification process relies on data from multiple sources to ensure accuracy and reliability.

Why Choose Automation?

For businesses, manually verifying each IBAN can be a time-consuming task. Our automated IBAN control solution allows you to:

Save Time by Validating Thousands of IBANs in Seconds
Enhance Security by Detecting High-Risk IBANs.
Improve Efficiency by Integrating Our Tool with Your Existing Systems.

Whether you need to verify an IBAN for transfers or conduct routine checks, our platform is your ally in the fight against fraud.

Ultimately, the success of the Verification of Payee service in reducing the upcoming fraud highly depends on the quality of the underlying matching algorithms. And as the deadline quickly approaches, proactive action is essential to ensure both compliance and operational readiness.

Key takeaways

Name matching is complicated by variations in spelling, use of initials and nicknames, special characters, different languages, and inconsistencies in how names are entered across banking systems.
They are developing advanced algorithms and using artificial intelligence to improve accuracy, accommodate variations, and reduce false positives in the name matching process.
Enhanced name matching helps prevent fraud, reduces payment errors, ensures smoother customer experiences, and strengthens trust in digital payment systems.