Bank account verification is a mandatory part of the customer onboarding process. It ensures the legitimacy of the beneficial owner. The main motto is to ensure that the party involved in giving funds or taking funds have no illegal connection, acquiring this knowledge helps the other party to be on the safer side and nullifies the chances of falling prey to any severe illegal consequences.
The process of identifying the authenticity of the bank account owner with which the businesses would do financial transact is referred to as bank account verification. This ensures that the bank accounts they are dealing with are linked to a legitimate person and not any imposter.
Bank account verification cancels out the chances of the input of wrong credentials or money being transferred to the wrong account. In both cases, the businesses are left with a long follow-back process for a refund.
By following the accurate pattern of bank account verification businesses can avoid getting stuck in nuisances such as providing proof of erroneous transactions which indeed is time-consuming and various others, for reversing the transfer made.
BAV comes in when the businesses transact with a new customer for the first time. Also, BAV might be required at certain intervals when there is any account update or some suspicious activity from the owner’s end.
Bank account verification is a strong process that ensures the authenticity of beneficial owners of the account that they are dealing with, whether sending or receiving money. Hence, safeguarding themselves from the risk of fraudulent uses.
There are companies that offer the services of instant online bank account verification. They use their APIs to acquire and fill in real-time data. Below given are some of the traditional ways of bank account verification
1. Deposits or Penny Drop Verification
In this process, the businesses transfer a small amount to the customer's account. The customer is asked to send it back via a form and enter all the credentials of the transfer.
2. Sending Bank Statements
The customers are asked to submit bank statements to the businesses they want to transact with.
3. Credit checks
The business merchant cross-checks the information from the credit agencies about their customers’ accounts.
4. Open Banking
Businesses can opt for open bank providers. In this case, a merchant connects to their customer’s bank account in real-time directly. The cross-check and verification of the customer’s bank account are done instantly. The merchant compares the customer's name, bank account number, and other details. The entire process is a matter of a few seconds and is hassle-free.
The businesses work with regulated companies often termed third-party providers. These organisations offer account information services (AIS) and use application programming interfaces (API).
Verification TypeTime Required Micro Deposits 1-2 daysBank Statements Up to days 10 Credit Agencies Instant Zoop.OneInstant
Verification service providers have different pricing plans based on the volume of transactions. The businesses are advised to know about the pricing plans of the service providers in advance after closely assessing their needs and locking the deal that is both economical and absolute in terms of services.
Below mentioned are the top services offered by verification service providers:
Know your customer (KYC)
Identity Verification (IDV)
Bank account verification is indeed essential to create a positive customer experience. It reduces the risk of any fraud or criminal activity by third parties. As per the great payments disruption report, 9 out of 10 respondents were anxious about the rising digital bank frauds, including credit card fraud.
It builds trust in the customer that the merchant they are dealing with is secure.
The major contribution of bank account verification is trust building amongst businesses and customers. The businesses are sure that the people they are connecting with are real and not fraud account holders hence the security issues are resolved. Also, it guarantees a secure flow of money.
The process of bank account verification is mandated by the regulatory authorities. There are numerous companies offering facilities to help the companies verify the bank account of their prospects instantly. Zoop.One is one of the leading service providers that can help you in verifying all your customer details, including phone verification, bank account verification, address verification, and more.
1. How do you verify a bank account?
Ways to verify bank account
Checking bank statements
Merchants can cross-check the customer's information with credit agencies
2. How long does it take for a bank account verification?
It totally depends on the method chosen. Micro deposits online can be done quickly, while asking for a bank statement from the customer to cross-verify can take up to several working days.
3. What are bank verification documents?
Scanned copies of government-issued IDs can be used as bank verification documents example, the Aadhaar card, Passport, Driving Licence, PAN etc.