Instant account verification: all you need to know

Instant account verification
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When one of the most reputable French banks, Société Générale, audited its vendor database, the team realized that only 40% of the data was reliable. Instead of completing manual checks for the other 60%, they decided it was time to partner with Trustpair. They cleaned up the data of over 32,000 vendors, through instant account verification, completely wiping the risk of fraud. Instant account verification is a fast, secure, and reliable way to validate the bank account ownership of your customers and suppliers. Learn more about how it works and how to partner with providers like Trustpair to implement it into your own business checks.

Contact a Trustpair expert to learn more about our account verification services!

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Instant account verification: what is it?

Instant account verification (IAV) refers to the action that businesses take to directly check that the financial details they have been given are genuine, and are related to the right customer.

It’s typically performed by businesses when accounts are first opened in order to verify supplier or customer identities. However, organizations also use instant account verification in order to set up recurring payments like direct debits to ensure the customer:

  • Has a valid account that can make payments
  • Has provided an account that matches their identity

The data required for instant account verification includes the account holder or business name, account number, and routing number at minimum.

How does account verification work?

Instant account verification works through a process known as Confirmation of Payee (CoP):

  1. Inputting the data with consent from the account holder (whether that’s a customer or third-party business account holder)
  2. Connecting securely with open banking, as per regulatory standards, through an API
  3. Verifying the data: the system will check that the account exists, is valid (in terms of routing numbers and account numbers), and is active
  4. Verifying account ownership – validating that the account holder is the true owner of the account details they have given
  5. Providing instant feedback that gives a simple yes or no answer

Why perform instant account verification?

By performing automated account verification, businesses don’t have to rely on limited payment options and can maximize their conversions.

Channels such as pay by bank, for example, which requires instant account verification, is the number one choice to pay regular bills for 59% of consumers. Similarly, by offering customers their preferred payment method, online businesses can reduce their cart abandonment by an average of 20%.

By expanding to such channels and validating account data, organizations can rely on confident recurring revenue forecasting, and make more accurate and strategic decisions. Finally, instant account verification throughout the supply chain can help merchants reduce the risk of fraud while maintaining strong relationships with their suppliers.

What are the other methods to check banking information?

Microdeposits, also known as the penny drop method, are an alternative way to validate banking information. Penny drops work by making a deposit of a random amount under $1 into the user’s account, with the user then feeding back the right amount to confirm account ownership.

It can also work in the opposite direction, where businesses set up a tiny payment (again, under $1), from the user to their bank, which is then reversed as soon as it’s successful. Imagine cooking a ‘test batch’ of baked goods before you roll out the recipe on a wider scale – that’s what microdeposits can do in the banking industry.

However, penny drops are not the gold standard because they’re not fully automated. By requiring the customer to confirm the right amount, for example, it can become manual and cumbersome.

The biggest red flag, however, is that cyberfraudsters can quite easily get around microdeposits. By accessing an account that’s not their own, impersonators can give the right answers and meet your checks successfully.

Learn more about cyber-fraud and its impact on companies in our 2024 Fraud Study!

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Why is instant account verification the ultimate way to eliminate fraud?

Unlike microdeposits, instant account verification is the best way to eliminate fraud and validate users. Some of the biggest benefits include:

  1. Real-time verification
  2. Low cost
  3. Low abandonment rate
  4. Reduction in payment delays
  5. Elimination of fraud

In particular, IAV’s unmatched speed provides feedback instantly to businesses, meaning that they can confidently make decisions in real-time. When suspicious activity is discovered, you can then prompt more information, or instantly block any money from leaving your account.

Thanks to this speed and automation, the user isn’t forced to fill out lengthy paperwork or prove their identity by uploading documents. With 22% of customers giving up on their purchases thanks to a too-long or complicated checkout process, automation reduces both friction and cart abandonment rates.

At Trustpair, we provide instant account verification thanks to access to our abundance of banking information. With a 100% record protecting more than 300 clients against vendor fraud, we can help you secure the entire global supply chain.

To experience your own seamless security in action, contact Trustpair for a demo.

Key Takeaways

  • Instant account verification refers to the automated, real-time checking of a customer or supplier’s identity and their ownership of the bank account details they give
  • It’s better than the alternative, microdeposits, because fraudsters who gain access to a victim’s account can’t exploit the same loopholes
  • Instant account verification is the gold standard to eliminating fraud and Trustpair employs this digital solution to maintain our 100% success rate against payment fraud

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FAQ
Frequently asked questions
Browse through our different sections and find the answer to your question.

Instant account is a ‘safe’ way to verify the identity and ownership of a bank account. The process is encrypted, ensuring personal details remain secure during transactions, and it complies with all regulatory requirements. Plus, it always requires consent and authentication from the account owner, making it an ideal method for ensuring compliance and preventing unauthorized access.

Yes, businesses can partner with instant account verification providers to verify bank accounts online. Through intelligent API integration, you can automatically manage the digital validation of account ownership and secure the deposit and document records, ensuring efficient compliance with industry standards.