Instant Bank Account Verification

2020 Guide 

Get in Touch

We'll get back to you just as fast as we can.

 

Instant Bank Account Verification from AgilePayments

IBV

Many businesses need to mitigate risks when onboarding a new customer. These needs can vary but typically there is the need to:

  • Validate a bank account is open and in good standing
  • Validate the person presenting the account “owns” that account
  • Validate bank balance
  • Check account history eg validate loan history and ability to repay
Instant Bank Account Verification from AgilePayments is a relatively new tool that addresses these needs. 
 

Get More Info on Instant Bank Account Verification

 

 
How The Instant Check Verification Process Works

Typically the consumer visits a business website and when they purchase or sign-up the consumer is prompted to log-in to their online bank account via a lightbox or pop-up screen.

plaid-login

Once the consumer has logged in the business can tag along and pull account data via an API.  In some cases, there can be repeat peaks into the consumer account. This feature is typically used to validate bank balance.

Instant Bank Account Verification is especially attractive to lenders and businesses that want to enroll a customer into a recurring ACH based payment plan.

For many businesses no authorization component means that an Instant Bank Account Verification System is needed to mitigate payment acceptance risk.

New client  onboarding is a major friction point for any business that relies on future recurring payments. Examples would be insurance companies with premium payments, an alarm monitoring business collecting monthly monitoring fees or car loan repayment.

The customer may provide their bank account and routing info or a voided check might be taken. In either case, there is the potential for user error when inputting data. Using an Instant Bank Account Verification tool this risk is significantly reduced.

What risks does Instant Bank Account Verification mitigate?

Instant Bank Account Verification from AgilePayments.com

Instant Bank Account Verification can help mitigate the following payment-related risks:

  • Consumer enters incorrect routing and account number
  • Consumer uses fraudulent account info 
  • Payout risk: eg an insurance claim is paid out to the incorrect account
  • Non-sufficient funds 
  • Poor loan decisioning

Instant Bank Account Verification versus existing Checking Account Verification Tools

IBV-Infog

In the past, it was common to initiate a pre-note to the consumer bank account. A pre-not is a zero $ inquiry sent to the consumer’s bank account.  In 2-3 days if a bad account notice was not returned you could assume the account was good. Issues are time delay and that you are only validating account data. Ownership, balance, and history are not available.

Microdeposits became the de facto solution. A business would deposit small-dollar amounts and ask the consumer to then validate those $ amounts. As you can imagine there is friction and user adoption drops off. Again you are only validating the account is valid.

Another option is negative databases. Based on history [both positive/negative] of that checking account info, a response is returned regarding the account status. An example would be writing a check at Home Depot. If the check is good or bad, Home Depot can report that check status to the database. With many retailers contributing data to the network, there are many millions of checking accounts to reference.

Recency is an issue, as the customer’s last instance of writing a check at a participating retailer becomes the last data point. This means that data can be stale or a known bad check writer may not have made it into the database in a timely fashion.

The next level is Real-time Check verification and comes from banks and Credit Unions contributing data from their ATM network. A daily upload of account status is made to the network and queries to the network can provide account insight. When a check verification inquiry comes in a real-time response can be generated. These responses can tell you:

  • account is closed
  • account # is invalid
  • account is non-DDA eg Home Equity checks
  • account is in an NSF status: For some businesses, this is important as they do they know they have a good account
  • account has pending NSF’s or stop payments
  • account is open and in good standing with a positive funds balance. Very importantly you do not get a balance confirmation. The account can have $2 or $20000.

Although this solution reduces risk, can be automated and offers nearly instant responses, it does not balance check nor authenticate account ownership.

For lower-risk businesses, this solution may be the better option as the per cost inquiry difference is substantial.

To learn more about Instant Check Verification contact AgilePayments today