Instant euro payments and payee verification: new obligations for Czech banks and payment institutions

Verification of the payee

One of the most significant changes introduced by Regulation (EU) 2024/886, known as the Instant Payments Regulation (IPR), is mandatory verification of the payee not only for instant but also for standard euro credit transfers. The payer’s payment service provider (typically a bank or payment institution – for simplicity, referred to below as the “payer’s bank”) must carry out the verification immediately once the payer enters the payee’s details and before allowing the payer to authorise the payment.

If the payer enters the payee’s IBAN and name, the payer’s bank will ask the payee’s bank to verify whether the two details match. In the event of a mismatch, the payer must be warned that proceeding with the payment may result in the funds being transferred to an account that does not belong to the stated payee.

The rules also cover cases where the details differ only slightly. In such a case, the bank will inform the payer of the name associated with the IBAN so that the payer can decide, before authorising the payment, whether to proceed.

For legal entities, another identifier that uniquely identifies the payee, such as a tax identification number, European unique identifier or LEI code, may be used instead of the name.

The IPR also addresses payment channels where the payer does not enter the payee’s IBAN and name at the same time. In these cases too, the bank must ensure that the payee is correctly identified and must have reliable internal procedures in place for this purpose.
 

Instant euro credit transfers available 24/7

Payment service providers that offer their clients the sending and receipt of standard euro credit transfers will also have to offer an instant option. Instant credit transfers must be available 24 hours a day, seven days a week, on every calendar day.

The payee’s bank must, within ten seconds of receipt of the payment order, make the amount available in the payee’s account and confirm completion of the transaction. If the payer’s bank does not receive such confirmation within ten seconds, it must, free of charge and without delay, restore the payer’s account to the state it would have been in had the transaction not taken place.

It must also be possible to initiate an instant credit transfer through the same channels that clients can use for other credit transfers. Therefore, if a bank allows standard credit transfers to be initiated via online or mobile banking, at a branch or by other means, it must also make the relevant channel available for instant credit transfers.

Importantly, the fee charged to the payer or payee for an instant credit transfer must not exceed the fee charged for another credit transfer of the corresponding type.

A narrowly defined exemption applies to payment service providers in Member States outside the euro area in respect of instant euro credit transfers from accounts denominated in the national currency. Subject to prior authorisation by the competent authority – in the Czech Republic, the Czech National Bank – a per-transaction limit may be set in view of the provider’s access to euro liquidity. However, this limit must not be lower than EUR 25,000.
 

Who will bear the risk of a payment sent to the wrong payee?

Verification of the payee also changes the allocation of liability between payment service providers and their clients.

A typical example will be a situation where a client enters the correct name of the intended payee but an incorrect IBAN. Before the payment is authorised, the bank must verify whether the details entered match. If it identifies a mismatch, it must alert the client and inform them that authorising the payment may result in the funds being transferred to an account that does not belong to the stated payee. If the client nevertheless decides to authorise the payment, the bank will not be liable for the payment being made to the wrong account.

Likewise, the bank will not be liable if it has carried out the verification correctly. If the client enters matching details that nevertheless identify a different payee, the bank cannot determine that the client intended to send the funds to someone else.

The position will be different if the bank fails to meet its obligation to verify the payee and this failure results in the payment being executed incorrectly. In that case, it must refund the transferred amount to the client without delay and, where applicable, restore the client’s account to the state it would have been in had the payment not taken place.
 

When will the new rules take effect in the Czech Republic?

For payment service providers in Member States whose currency is not the euro, the IPR provides for a phased introduction of the individual obligations.


From 9 January 2027, banks must be able to receive instant euro credit transfers. For payment institutions and electronic money institutions, this obligation will apply three months later, from 9 April 2027.

From 9 July 2027, providers must also enable the sending of instant euro credit transfers. The obligation to verify the payee will apply to Czech providers from the same date.

For the sending of instant euro credit transfers from accounts denominated in Czech korunas, the IPR provides, subject to the relevant conditions, for a further transitional period until 9 June 2028.
 

The euro is only the beginning

For the time being, the IPR focuses on euro credit transfers. However, the forthcoming EU PSD3/PSR package goes further.

Under the final compromise text of the Payment Services Regulation (PSR) endorsed in April 2026, the mechanism of checking whether the payee’s name matches their account identifier is also to be extended to credit transfers that do not fall within the current IPR rules. At the same time, the new framework is intended to significantly strengthen client protection against payment fraud, including so-called spoofing, where a fraudster impersonates a payment service provider.

For Czech banks and payment institutions, the IPR therefore represents the first step towards a broader transformation of the EU framework for preventing payment fraud and allocating liability between clients and payment service providers.