How PSD3 and Instant Payment Regulations Impact Banks in 2025

Regulatory requirements 6 min read

What Banks Need to Know About PSD3 and Instant Payment Rules in 2025

Europe’s banking sector is entering a new era. With PSD3 on the horizon and SEPA Instant Payment Regulation already adopted, financial institutions in the DACH region (Germany, Austria, Switzerland) face a simple question: adapt now — or be left behind.

What’s coming isn’t just another round of red tape. It’s a fundamental reset of how payments, fraud prevention, and customer protection will work across the EU.

Let’s break down what’s changing, what’s required, and why Verification of Payee (VoP) is becoming the go-to solution for staying compliant — and staying competitive.

PSD3 and SEPA Instant Payments: What’s Actually Changing?

PSD3: The Next Big Shift in Payments

The Third Payment Services Directive (PSD3) is the EU’s response to the growing sophistication of fraud and fragmentation in financial services. While the regulation isn’t finalized yet (expected by the end of 2025), here’s what banks can already count on:

Tougher fraud prevention rules: Stronger authentication, faster reporting, and stricter liability handling.
IBAN-name matching encouraged: Not yet mandatory, but clearly promoted as a way to stop misdirected payments.
Stronger consumer rights: Faster dispute resolution, clearer communication, more transparency.
Centralized supervision: Pan-EU oversight via the EBA — goodbye national inconsistencies.

SEPA Instant Payment Regulation: Deadlines You Can’t Miss

Already in force as of 2024, this regulation mandates that by October 9, 2025, all banks in eurozone countries must:

Offer SEPA Instant Payments by default
Process them 24/7/365, within 10 seconds
Charge no more than for regular SEPA transfers
Deploy fraud prevention mechanisms — VoP being the most practical solution available

Banks outside the eurozone have until July 2027 — but inside the DACH region, the clock is ticking fast.

The Real Compliance Challenges Banks Face

1. Rising Fraud, Rising Pressure

APP fraud — where criminals trick users into sending legitimate payments to fake accounts — is one of the fastest-growing threats. National regulators in Germany and across the EU are pushing hard for VoP adoption to fight it.

Expect VoP to become de facto mandatory long before it becomes de jure.

2. IBAN-Name Matching at the National Level

While PSD3 doesn’t require VoP, 20+ EU countries, including Germany, are already making it part of their domestic requirements. By October 2025, IBAN-name checks will be essential for compliance across much of Europe.

The European Payments Council (EPC) VoP scheme provides a common framework — but rollout is happening country by country.

3. Core System Upgrades

Instant payments aren’t just about pressing “send.”
Banks must:

Integrate secure, low-latency APIs
Support VoP in real time
Run fraud checks mid-transaction
Maintain audit trails and data protection under GDPR

It’s a tall order — especially for banks running on legacy infrastructure.

4. The Cost of Doing Nothing

Fraud is no longer just a financial risk — it’s a reputational and regulatory liability.
Payment errors, customer complaints, and publicized breaches hurt more than ever.

In DACH, where trust is a key competitive asset, no bank can afford that kind of exposure.

Why Verification of Payee Is the Shortcut to Compliance

VoP solutions are doing the heavy lifting where PSD3 and SEPA meet.

They help banks:

Stop misdirected payments before they happen
Detect fraud in real time, especially when paired with behavioral analytics
Keep regulators off their backs, thanks to clear audit trails
Reinforce customer trust, by showing proactive risk protection

In short: VoP is the fastest path to meeting new expectations — and standing out in a saturated market.

Waiting Isn’t a Strategy — Here’s Why

By the time PSD3 is finalized, and SEPA’s instant payment deadlines go live, the window for smooth implementation will have closed.

Banks that delay will face:

Disruption to payment services
Hefty penalties and regulatory scrutiny
Higher fraud losses
Customer churn to more secure competitors

And those who act early? They’ll be first to market with:

Frictionless, secure instant payments
Automated compliance reporting
A reputation for reliability in a risky space

Compliance Is the Starting Line, Not the Finish

Regulators are raising the bar — but it’s the banks who turn compliance into competitive advantage.

Verification of Payee isn’t just about playing defense — it’s about building a smarter, safer payment experience.

At Checkpayee, we help banks get there — fast, securely, and with full alignment to SEPA and PSD3 requirements.

Book a consultation to find out how we can future-proof your payment stack.