Methods such as micro-deposits, void checks, and bank statements have long been cornerstones for verifying the authenticity of financial accounts and confirming that payment credentials are legitimate. The main objectives of any account verification are twofold: 1) verify if the account and routing numbers provided by the consumer are valid, and 2) verify that the consumer has access to the designated account.
Although reliable, these methods can be time-consuming and result in less-than-optimal user experiences. Micro-deposits can take from one to three business days before the consumer can come back with the information. In today’s instantaneous world, that’s enough time for prospective consumers to abandon multiple times.
More urgency was introduced in March 2021 with the implementation of Nacha's latest update to the WEB Debit Rule. This update introduced a crucial requirement: organizations must establish a commercially reasonable approach to validate the legitimacy of an account number before executing a debit entry. The objective is to ensure that the designated account is legitimate, open, and capable of receiving ACH transactions at the receiving financial institution. Many organizations have since been proactively adopting strategies to align with this rule and verify the accuracy of provided account and routing numbers.
Validating account legitimacy: historical techniques
Various methods have been used to validate accounts, but three stand out as the most common:
- Sending ACH pre-notifications: Often referred to as prenotes, these are zero-dollar payments meant to test the validity of an account. Success is indicated by the absence of returns or notifications of changes.
- Using ACH micro-deposits verification: Also known as trial deposits, these are payments under one dollar used to verify an account, usually in pairs. Successful verification requires the user to confirm the values of the received payments.
- Third-party validation services: Utilizing commercially available services from external vendors.
These techniques work, but they’re cumbersome to implement and provide suboptimal (if not painful) user experiences. Both ACH prenotes and micro-deposits take days to clear and require multiple actions from consumers.
Enter Open Finance, APIs, and Akoya’s Payments product.
Modern technologies offer modern solutions. In today’s market, speed has an immense impact on the user experience. That’s why Akoya’s Payments product comes with instant account verification built in. We offer a simple way to retrieve verified accounts and routing numbers directly via APIs.
Instant account verification with Akoya
Akoya’s permissioned data access network retrieves the account and routing numbers of a consumer’s account directly from their financial institution’s API. This mechanism satisfies Nacha’s WEB Debit Rule, eliminates the need for additional validations or outdated solutions, and lowers the potential for drop-offs. Our verification solution ensures a seamless user experience, with all verification processes occurring in the background of the user session.
Akoya’s Payments solution directly retrieves the consumer’s account information on their behalf, removing the hassle for consumers to manually type it in. This occurs for any linked account with consumer consent.
Companies receive both the information and the verification quickly via one API call with no need to integrate with any other third-party verification service. This speed directly results in an enhanced experience for consumers.
At Akoya, we extend our capabilities beyond verification, offering a range of products and services that enhance consumer experiences through simplified API calls. These include balance checks on consented accounts, retrieval of up to two years of transaction history depending on the use case, and validation of account ownership. To learn more, check out our blog, or contact us for more information.
Future data access use case deep-dives:
Curious about other use cases that Akoya can help with? In future posts, we’ll explore:
- Account ownership validation: Mitigate account fraud risk by retrieving the consumer's customer profile on file with their financial institution and validating this information (such as first name, last name, mailing address, and phone number) against records.
- Financial accounts aggregation: Gain a comprehensive understanding of consumers' financial profiles by aggregating multiple accounts and making well-informed risk-based decisions.
- Account number tokenization: Retrieve tokenized account numbers that work like the real ones. Help de-risk the entire industry by reducing the sharing of payment credentials.
