Verification Of Payee Scheme Inter-PSP API Specifications: Building a Standard for Safer Payments

In an increasingly digital economy, the safety and integrity of financial transactions have become paramount. Among the most promising innovations in preventing fraud and misdirected payments is the Verification of Payee (VoP) scheme. At the heart of this initiative lies a key technical component—Inter-PSP API specifications—which defines how different Payment Service Providers (PSPs) communicate securely and consistently.

This blog breaks down what the Verification of Payee Scheme Inter-PSP API Specifications are, why they matter, and how they ensure seamless interoperability between banks and fintechs to protect users in real time.



What Is Verification of Payee (VoP)?

Verification of Payee is a real-time name-checking service introduced to ensure that the name entered during a bank transfer matches the actual name on the recipient’s account. It adds a critical security layer before money leaves the payer’s account, helping to combat Authorized Push Payment (APP) fraud and other types of scams.

While this sounds simple at the user level, there’s a robust backend ecosystem working to make it happen—Inter-PSP APIs.

Understanding Inter-PSP API Specifications

When you initiate a payment, your bank (the sending PSP) must verify the recipient’s account details with the recipient’s bank (the receiving PSP). The Inter-PSP API is the technical bridge that allows these two entities to talk to each other securely and in real time.

Key Objectives of the Inter-PSP API Specification:

  1. Standardization – A unified format for request and response payloads ensures compatibility across different financial institutions.

  2. Security – Encrypted communication channels and authentication protocols protect sensitive customer data.

  3. Speed – Real-time response capabilities ensure that VoP checks don’t slow down the payment experience.

  4. Auditability – Traceability and logging mechanisms are built-in for compliance and fraud analysis.

How the VoP Inter-PSP API Works (Simplified Flow)

  1. Payment Initiation: User initiates a transfer and enters recipient name, account number, and sort code.

  2. API Call to Recipient PSP: The sender's bank uses the VoP API to request name verification from the recipient's bank.

  3. Match Response: The recipient’s PSP sends a response—Match, Close Match, or No Match.

  4. User Confirmation: Based on the response, the sender is advised to proceed, amend details, or cancel the transaction.

Why These Specifications Matter

✅ Cross-Bank Compatibility

As fintech apps and challenger banks grow, payments are now happening across a broader range of PSPs. The VoP Inter-PSP API specification ensures all players in the ecosystem can work together smoothly, reducing friction and risk.

✅ Reduced Fraud

Standardized VoP checks powered by APIs enable quick detection of discrepancies in recipient details, which is a major tactic used in fraud schemes.

✅ Compliance with Regulation

In jurisdictions like the UK and Europe, regulatory bodies are encouraging (and sometimes mandating) the adoption of VoP. The Inter-PSP API is critical to meeting those obligations effectively.

Challenges in Implementing VoP Inter-PSP APIs

  • Data Privacy Concerns: Banks must ensure that customer data is shared strictly for verification purposes and complies with regulations like GDPR.

  • Latency and Downtime: A lag in API response times or outages can disrupt the customer experience.

  • Integration Costs: Legacy systems may require significant updates to support new APIs, especially for smaller PSPs.

The Future of VoP Interoperability

The evolution of Verification of Payee (VoP) is closely tied to how well financial institutions collaborate using standard API frameworks. As more countries adopt VoP schemes, the need for internationally recognized Inter-PSP API specifications will grow. It’s possible that VoP may become as integral to payments as IBANs or SWIFT codes, especially in cross-border transactions.

Conclusion: APIs Are the Backbone of a Trusted VoP Ecosystem

The success of Verification of Payee doesn’t rely only on policy—it’s powered by technology. The Inter-PSP API specifications make it possible for real-time verification across institutions, enabling a trust-first approach to digital transactions.

As the financial world becomes more interconnected and digital, investing in robust, standardized VoP APIs is not just beneficial—it’s essential.

Read more - Cross-Border Payments and VoP: Challenges and Opportunities

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