EPC Revises Payee Verification Rules as EU Instant Payments Challenge Legacy Clearing Systems
Oct. 21, 2026 • Deep Dive • Banking & Payments
The European Payments Council has issued Version 1.1 of its Verification of Payee rulebook, effective September 20, 2026. The update addresses operational issues identified after launch, clarifies API specifications and refines the API Security Framework. It follows Eurozone deadlines requiring payment service providers to receive instant euro transfers from January 2025 and to send them and offer payee verification from October 2025.
Under Regulation (EU) 2024/886, instant euro credit transfers must complete within 10 seconds and be available around the clock. Payee verification occurs before a transfer is executed, adding a separate real-time exchange to the payment process. Together, the requirements challenge legacy systems built around scheduled batch processing. Non-eurozone EU providers face receiving and sending deadlines in 2027, while national supervisors are collecting transaction, fee and decline metrics to monitor compliance.
The European Payments Council (EPC) has issued Version 1.1 of its Verification of Payee rulebook, with an effective date of September 20, 2026. The update addresses operational issues identified after launch, clarifies API specifications and refines the API Security Framework. It comes as payment service providers (PSPs) adapt their systems to EU requirements for instant euro transfers and checks on the intended recipient.
Regulation (EU) 2024/886 requires instant credit transfers in euro to complete within 10 seconds, end to end, and to be available 24 hours a day, 365 days a year. Verification of Payee adds a check before the transfer is executed. For PSPs using older clearing infrastructure, the challenge is not simply to move a payment faster: their systems must also exchange and act on information in real time rather than wait for scheduled processing windows.
Deadlines move the requirements into everyday operations
Eurozone PSPs were required to support receiving SEPA instant credit transfers by January 9, 2025. A second deadline, October 9, 2025, required them to support sending instant transfers and offer Verification of Payee. For non-eurozone EU providers, receiving capability is required by January 9, 2027, followed by sending and payee-verification integration by July 9, 2027.
The regulation also requires price parity: PSPs cannot charge more for an instant euro credit transfer than for a standard, non-instant euro credit transfer. National financial supervisors have introduced ongoing compliance reporting, including periodic metrics on instant transactions, fees and declines. The reporting places operational performance alongside the legal requirement to offer the service.
The EPC’s revised verification rulebook is therefore relevant beyond the initial Eurozone deadlines. Its changes concern how providers implement the verification process, including API specifications and security rules, while another group of PSPs prepares for statutory go-lives in 2027.
Why batch clearing cannot simply be accelerated
Legacy batch-clearing systems typically collect payments for scheduled processing and end-of-day netting. Instant payments instead depend on a continuous, synchronous exchange of ISO 20022 messages. A PSP must be able to send or receive a request, process it and return a response without waiting for a batch window.
Clearing and settlement mechanisms such as TIPS and RT1 operate under EPC latency targets, with positive or negative response timeouts generally capped between five and nine seconds. Those shorter response windows leave limited room within the overall 10-second requirement for a provider’s own processing. A system that can eventually clear a payment but cannot respond promptly is not suited to this operating model.
Verification of Payee is a separate pre-execution step. The payer’s PSP queries the payee’s PSP in real time, using routing and verification mechanisms or the EPC Directory Service. The result tells the payer’s provider whether the supplied details are a match, a close match or no match before funds move. This means the verification exchange must be reliable in its own right; it cannot be treated as a check to complete after execution. The EPC’s API clarifications and security changes address the rules governing that exchange, rather than extending the deadline for a completed instant transfer.
Compliance reaches beyond clearing connections
The regulation changes another part of the payment workflow to avoid delays. Under Article 5d, mandatory daily screening of customers against sanctions lists replaces transaction-by-transaction sanctions screening for these transfers. The change addresses the time that checking each payment individually could add to processing, while retaining a required screening step.
The Instant Payments Regulation also amends the Settlement Finality Directive and PSD2 to give payment institutions and electronic money institutions direct access to central clearing systems without compulsory commercial bank sponsorship. Access, however, is distinct from the ability to operate within the required response times or deliver payee verification.
The EPC’s 2025 rulebook removed the former default €100,000 scheme-level cap on SEPA instant credit transfers. That does not mean every PSP must allow transfers of any size: institutions and national jurisdictions can still impose security or liquidity limits. Providers therefore have to manage their own limits within the broader instant-payment framework.
For non-eurozone EU PSPs, the next milestones are the 2027 receiving, sending and verification deadlines. For providers already subject to the Eurozone requirements, the revised EPC rulebook and ongoing supervisory reporting keep attention on how consistently their systems perform—not only whether they can connect to an instant-payment rail.
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The European Payments Council implemented Version 1.1 of its Verification of Payee scheme rulebook on September 20, 2026, clarifying operations, API specifications and security after feedback from live deployment. Its directory service, operated with SWIFT, has also completed a live transition supporting provider reachability and routing. The changes come as non-eurozone EU payment providers work toward a July 9, 2027, compliance deadline. Required under the EU Instant Payments Regulation for both instant and standard SEPA credit transfers, Verification of Payee checks recipient details before authorization and must be offered free to users. The inter-provider exchange has a five-second operational maximum and can return a match, close match, no match or verification-not-possible result. A close match supplies the verified recipient name for the payer to review. A warning does not necessarily prevent a transfer: liability depends on whether a payer proceeds despite it or a provider fails to perform a required check.
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