Payee verification is a check, made before a credit transfer is sent, that the name of the intended recipient matches the name on the account the payer has entered, and the EU service of this kind is explained in full under Verification of Payee (VoP). "Payee verification" is the generic, descriptive name, while Verification of Payee is the formal term used in EU law and the European Payments Council scheme.
Under the EU Instant Payments Regulation, payment service providers in the euro area must offer payee verification for euro credit transfers, both instant and standard. The payer's bank asks the payee's bank whether the name and the IBAN match, and the payer is told whether there is a match, a close match or no match before approving the payment. In the United Kingdom, the similar service is Confirmation of Payee, and other countries run comparable schemes.
Payee verification is designed to reduce misdirected payments and scams in which fraudsters persuade victims to pay accounts that are not what they seem. It is related to beneficiary validation, which can also include checking that an account exists and can receive funds.