Also available in: Deutsch (German)

For years, SEPA payments have usually been processed with the valid IBAN number alone. The name of the account holder played practically no role. This will soon be a thing of the past.

At the beginning of November 2023, the EU Parliament and Council of Ministers agreed to make SEPA real-time credit transfers mandatory and at the same time to make name verification compulsory. In itself, this is of course a welcome measure to make fraud more difficult. For years, criminals have been scamming money from unsuspecting, mostly elderly people using the so-called grandchild trick. They believe they are safe when they transfer money to an account with the grandchild’s name as the holder, for example. In reality, however, the payment was made to someone completely different. This was possible because a SEPA transfer previously ignored the name completely and used the IBAN.

A problem for the adult business?

In fact, name verification can also become a problem in the completely legal area. Today, agencies that look after several actresses and invoice their payouts can register with an agency account on many platforms and, for example, summarise the turnover of several camgirls. So far, so good. However, the problem starts with the platforms that do not offer designated agency accounts. The most prominent example is probably OnlyFans. Here, creators can enter their bank details with IBAN etc., but not the name of the account holder. Only Fans inevitably uses the plain text name of the respective profile owner. If the IBAN refers to an account of the supervising agency, this has not been a problem up to now. Due to the lack of name verification, the transfers arrived reliably, even if Only Fans entered the name of the respective natural person. However, this will change in the near future.

Real-time name verification for online transfers

The regulation stipulates that when an online transfer is carried out manually, the respective ordering party will receive a notification practically in real time as to whether the name matches or not. There will probably be various gradations, including “near matches” etc. This will primarily be the case if, for example, a first name is abbreviated or umlauts and other diacritical characters are transcribed. Even in the case of a complete mismatch, the client will be clearly informed of this fact by his bank. However, he can ignore the warning and still make the transfer. The background to this is that the bank is then completely exempt from liability if the transfer is actually credited to the wrong recipient unintentionally.

This procedure applies to manual transfers. But what about collective orders, which OnlyFans, for example, carries out millions of times a month? The EU regulations say nothing about this, although implementation is practically imminent. In the worst-case scenario, the transfers would then be rejected by the recipient banks and returned to the originating bank. As a result, the agencies would no longer receive any payments. However, it may also be possible for the client to instruct their bank to completely ignore any warnings regarding the lack of a name match and make payments purely on the basis of the IBAN as before. However, specific information on this is lacking.

Originally, the new regulation was only supposed to apply to real-time transfers, at least that is what the EU Commission proposed. However, the EU Parliament and Council overshot the mark and decided to apply the name check in one fell swoop to standard transfers, which must reach the recipient within one bank working day.

The countdown is on

The text of the new regulations has not yet been published in the Official Journal. However, this is reportedly expected for March 2024. As transposition into national law is no longer required in this case, the new rules will come into force almost immediately. Banks will have a maximum of nine months to enable real-time transfers and probably also implement the other regulations, such as name matching. As the banks’ IT departments always need a considerable lead time, it is expected that the introduction will take place in 2024, depending on the bank.

It will be interesting to see whether platforms such as OnlyFans prepare themselves and introduce agency accounts, for example, as is common practice with many other providers.

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