ACH account validation, a critical step for businesses

ach account validation

Last modified on March 19th, 2024

ACH fraud is on the rise: in 2021, 37% of finance professionals named ACH as a leading type of payment fraud they were confronted with. ACH account validation isn’t only a legal obligation, it’s a requirement to protect your company. Keep reading to find out why it is important, how it works, and what is the most effective way to do it.

Trustpair automates account verification for ACH transfers, as well as other payment methods to completely eradicate the risk of payment scams. Request a demo today!

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Why is account validation important for ACH payments?

ACH account validation is a crucial step of your payment process. It ensures that the account is valid and exists. In the case of an ACH debit, account verification will also verify that the account holds sufficient funds.

It’s the equivalent of the authorization taken for credit card payments. NACHA, the National Automated Clearing House Association doesn’t provide this kind of verification. It’s up to merchants — or businesses using ACH transfers — to check it.

ACH account validation is important as it lowers your ACH payment’s bouncing rate. It runs verifications of the routing numbers and the account numbers, ensuring there are no mistakes (voluntary or not).

In other words, ACH account number verification is what guarantees your ACH payments go through smoothly. It’s also a legal requirement to prevent financial scams such as ACH fraud.


What are the rules for ACH account validation?

The Nacha account validation rule has been a legal requirement since 2022. It aims to fight against financial scams on the ACH network.

This new regulation clearly states that “originators of web debit entries” must include account verification when processing ACH payments.

The term web debit covers any ACH transfer made through the Internet. It’s applicable for organizations of any size, in any industry, in the US. Non-compliance can lead to legal repercussions and hefty fines.

ACH account validation concretely means your company must check:

That must happen in two situations:

  • At the first use of the bank account
  • If there is a change of account.

In case of vendor fraud, however, the change of bank account can be done fraudulently — you know it’s happened before it’s too late. Using Trustpair prevents that by running automatic checks in the background before any transaction is sent.

ACH verification is mandatory when it comes to web debit accounts in B2C, but you want to do it in B2B as well. Supplier fraud is on the rise, and a healthcare company recently lost nearly $1M through an ACH scam.

With the current push towards instant payments, the risk is even bigger. Instant ACH transfers (also called real-time ACH) further reduce your chances of getting your funds back if they’ve been sent to the wrong account.


How does ACH account validation work?

When it comes to ACH bank account verification, there are several ways to proceed. Some organizations use one, others combine several — it all depends on your risk profile.

The best industry practice is to use the last method below, as a minimum.

Manual account verification

The OG way of validating accounts: doing it manually! In this scenario, you ask your client to give you a voided check. With the routing number and account number, you can carry out the account verification by directly contacting your client’s financial institution.

While it is straightforward, this way to verify bank accounts is time-consuming for your team — and almost impossible if you deal with a large volume of transactions.

Instant account verification

Much more modern, the instant account verification process happens online. Instead of manually typing their bank account, customers log in to their financial institutions through your website. The check is instantaneous.

Technically, the account verified by inserting a few lines of javascript (js) code on the banking website. ACH account verification js requires an internet connection, as users need to log in to their bank with their user name and log in to validate their account.

Micro deposits

Another way to do your ACH account verification is through microdeposits. Paypal for instance uses it when you add a new bank account to your account.

In this setup, your company sends two small ACH transactions (less than $1) to your customer’s account. The customer then comes back to you with the specific amount of the transactions to complete the ACH verification process.

Micro-deposit verification has an advantage: it doesn’t require an Internet connection. If you deal with consumers who aren’t tech-savvy or don’t have easy access to the Internet, it makes sense to use it.

However, it takes 1-2 business days to complete, so it’s best used in conjunction with other instantaneous verification methods.

Third party verification

Using third-party solutions like Trustpair is by far the most efficient way to do your account validation. The whole process is automated and can be done within seconds.

Software services use your consumer’s data to match it with their bank account. Once you add your customer bank account details, Trustpair automatically checks:

  1. The bank account numbers,
  2. The name it’s registered under,
  3. That both elements match.

Three-way matching provides a high level of security against fraud. It works for ACH, but also for validating accounts for domestic or overseas customers through wire transfers.

Since they specialize in account verification, third-party software has access to otherwise hard-to-reach data. They can for example get details on the account’s transaction history. All of that contributes to preventing fraud in your organization while providing an excellent experience to your suppliers.

Trusptair automates your account validation and does it in real time — which in turn provides instantaneous ACH account verification.

We connect with your banking system through API, providing an end-to-end secure experience for all parties involved.

It means that you’ll always be compliant with the Nacha rule, but also that you’re protected against vendor fraud. No hacker can maliciously change your supplier’s credentials and wire money to their own account.


Key Takeaways:

  • ACH account validation is a legal requirement, and also a necessary process to protect you against fraud.
  • There are various methods to verify bank accounts. The best one is to use Trustpair, which does automatic checks, protecting you against ACH and wire transfer scams.


It’s a legal requirement for any company in the US to check ACH web debit: the first time they do business with a client, or when the user wants to change their bank account details

Yes! We help you stay compliant with Nacha rules by automating the account verification process. Our solution runs real-time checks before any transfer is sent, which means you always know to whom you send money.

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