Verification of payee insufficient alone to tackle rising fraud

At EBAday in Copenhagen, Erwin Kulk, head of service development and management at EBA Clearing, warned that verification of payee (VOP) alone will not stop growing fraud or meet expectations from the Payment Services Regulator. He spoke to delegates about rising volumes of organised and more sophisticated fraud.

VOP checks whether the name provided by a sender matches the account details before a payment is sent. Kulk described it as “a strong introduction but no ‘silver bullet'” and added that “fraud has not reduced, but in fact continued to increase.” He noted VOP can block misdirected payments and simple social-engineering scams but cannot reveal wider patterns used by organised criminals.

Kulk urged payment service providers to add collaborative, network-based tools that can detect suspicious activity earlier, allow structured sharing of relevant data between firms, and enable real-time responses. He recommended systems for joint screening and standardised, machine-readable data formats to exchange contextual information about transactions and customer interactions.

Those network approaches aim to surface repeated indicators of fraud across multiple institutions, rather than relying on checks within a single PSP. Kulk added that industry coordination would help reduce losses and protect customers, and that regulators expect a combination of technical checks and cooperative tools.

Verification of payee has been rolled out in several markets to cut authorised push payment and misdirected-payment fraud by confirming payee names against account details before funds leave an account. Industry discussion is increasingly focused on combining VOP with transaction monitoring, data-sharing frameworks and faster alerting systems so participants can identify and disrupt organised fraud networks more quickly.