Verifying a customer’s bank account is among the most important steps a financial institution, such as a bank or a FinTech company, can take to reduce the likelihood that a customer may fall victim to a fraud or scam. ACH transactions have reached an all-time high, which can be attributed to the rapid advancement of technology. When doing ACH transactions, often known as online fund transfers, verifying a bank account is essential since it reveals the origin of the funds and reveals whether or not those funds are connected to any illegal activity.
As more companies provide the option to pay online, customers no longer need to rely on traditional payment methods, including credit cards or paper cheques. Finding a reliable technique of bank verification that is suited for consumers might be beneficial for users because it enhances the user experience.
How exactly does the bank verification process work?
What you must know about bank verification?
The name of the account holder, the bank account number, as well as the routing number, are normally the three essential pieces of information that are required for companies and banks to validate a bank account.
The last two pieces of information are the ones that are commonly utilized for identification because they are exclusive to each bank account.
On any check, digital or paper, that is issued by the bank, the information that is required for bank verification will be there. Additionally, it may be found in the profile section of one’s online bank account. The reference number will normally have nine digits, but the account number on such a bank account will often have 10 to 12 digits.
Benefits of bank verification
Spending less money on the conventional processing of checks. When a company accepts ACH transfers instead of paper checks, the number of paper checks that are received will decrease. In comparison to ACH transactions, the processing of an antiquated payment method like this one requires a greater amount of human effort, which in turn consumes more time and money.
Reduces the incidence of checks that are returned unpaid. The ACH verification procedure enables a company to learn whether or not the payer’s checking account has a history of being used to write fraudulent checks.
A rate of return that is lower. Errors made during data entry are one of the most common reasons for refused payment transactions. Because the ACH verification methods that are most typically employed are carried out online, there is a much-reduced possibility of errors occurring.
Steer clear of phishing
Phishing is a type of online fraud in which the perpetrator creates a website that seems like belongs to a reputable company and sends you an email that is a hoax to get you to give private information. You might be astonished to learn how many individuals disclose details of this kind to impostors who utilise phoney websites designed to appear as if they belong to reputable businesses. You must never reveal any of your private information to a third party unless you can verify that the person in question is who they claim to be.
Check that you have access to the account and that you own it.
This procedure verifies access to an account as well as ownership of it, which helps to prevent fraudulent activity. Yodlee can acquire various data components, such as the client’s name and phone number, which may be used to verify that the customer is the rightful owner of the bank account. Other information than whether an account is already in good academic standing with regular transactions that occur, including such payments and withdrawals, can be utilized to assist in the monitoring of fraudulent activity.
The additional ability to view both the current as well as available balances for a specific account is another step toward preventing fraud. Together, these bank verification procedures produce a streamlined and risk-free experience that benefits both the client and the financial institution. Yodlee was a pioneer in these improvements throughout the latter part of the 2000s, giving the capability to rapidly authenticate about ninety per cent of service providers through our links. We see this as a safety net that provides not only peace of mind but also expedites the bank verification process.
Instant Account Verification (IAV)
Utilizing the rapid bank verification service provided by the financial institution itself is the quickest technique for verifying a bank account. In certain cases, utilizing rapid account verification might even improve the quality of the user experience altogether. When using IAV, a user is required to select their financial institution and provide the credentials needed to access their online banking for the account to be verified. The user’s bank account is validated in a matter of milliseconds, at which point they are free to begin using the financial functions available to them.
With bank verification businesses can ensure the safety of their management as well as the customers. Nowadays bank verification is a vital aspect of operating a business in a digital space.