Best Practices for Account Verification Procedure

Nowadays, it’s no surprise that we need to do our bank account verification to make a move in the world of transactions. Iris scanning, facial recognition, smartphone tracking, and other identification methods help fintech players protect stakeholders from fraud.

Fintech giants have succeeded in making banks closer to ordinary consumers. Due to the rise of smartphone applications, the spectrum of account verification possibilities has sufficiently increased to include facial recognition, vocal patterns, and location tracking. In 2023, for example, the global identity verification market size reached USD 10.45 billion.

Yet traditional bank account verification online practices are subject to multiple errors, presuppose slow performance, require personal presence, and rarely offer a quality user experience. It is no wonder they’ve been replaced by remote verification. Fortunately, present-day banking operations are easier to perform with the help of various automated algorithms. In this article, we will talk about them in more detail. Read on!

Bank Account Verification: Algorithms Against Fraud

The account verification process is a security practice that ensures that a customer using the banking service is the same person named in the bank account. Usually, it requires the user to provide documents or other credible information to confirm their persona. However, modern banks strive for innovation and automation.

The market is expanding, bringing more clients and more funds to the niche. As the graph below shows, the bank account verification market is set on the path of growth, and this vector will remain unchanged until 2030.

Source: Grand View Research

The most popular algorithms used in the niche are NACHA and KYC.

Standing for the National Automated Clearing House Association, NACHA aims to manage the ACH Network by establishing standards for e-fund transfers. In turn, anti-money laundering (AML) and Know Your Customer (KYC) guidelines not only struggle against illegal operations but also facilitate client onboarding. Although regulations and compliance with standards constitute the backbone of, for instance, US bank account verification, they alone can’t ensure the security of transactions. Here’s where algorithms play first fiddle.

Present-day banking systems and payment processing software utilize machine learning and artificial intelligence to analyze physical biometrics or other customer data.

Powered by deep and machine learning algorithms, fintech applications are designed to detect fraudulent IDs quickly. Cybercriminals may gain access to customers’ personal information despite multiple encryption layers, so software engineers continually elaborate on new AI-based solutions.

Other Bank Account Verification Methods

Undoubtedly, not all programmable mechanisms rely on AI/ML. For example, payment processing software and banks often use a linear congruential algorithm to generate the Bank Verification Number (BVN) randomly. Your organization can also employ modulus checking, which is an approach to implementing mathematical algorithms intended to verify bank account numbers and sort codes.

Considering that an already verified customer may lose control of their account, developers are developing algorithms that identify facial biometrics and detect liveness to eliminate illegal transactions. Thanks to the smartphone revolution initiated by Apple, Samsung, and other big tech companies, payment processing software has access to facial recognition or other biometric data.

Additionally, applications utilize complex algorithms to detect liveness, thereby ensuring that the person trying to conduct a certain transaction is a verified account owner.

What Is Bank Account Number Verification?

Bank account number verification is a process of confirming that the bank account’s number is valid and belongs to a legitimate customer. It is usually used to verify data input by customers when they want to conduct an external transfer. In other words, your bank carries out a few test deposits to identify your account and routing number.

Most banking institutions already use Plaid and Stripe to ensure seamless money transfers due to instant authentication of a customer’s account as well as an automatic generation of tokens to receive Automated Clearing House (ACH) payments.

ACH is the electronic payment and money transfer system functioning in the US and essential to accept in your business because it allows the customer to transfer money between their accounts without credit card networks or paper checks. Most often, you can use a third-party entity to check your account via routing account number validation along with negative databases.

Account Verification Types

An account verification system is the process of confirmation by an entity that a particular user indeed owns and operates their account.

It concerns bank accounts or other digital spaces containing sensitive information, as well as social media, websites, etc. All in all, a bank account verification service is a must for organizations willing to reduce or even eliminate the activity of bots as well as the spread of fake news, spam, and disinformation. Among numerous verification types worthy of mentioning are:

1. Banking verification;
2. Biometric verification;
3. Identity verification;
4. Behavioral verification;
5. Email verification;
6. Postal address verification;
7. Account number verification.

Still, the above-enumerated account verification types rarely interest financial institutions. Instead, more often, they’re concerned with bank account verification methods, which include:

#1 Instant Account Verification Service (IAV)

Today banks offer this service inasmuch as it’s the most convenient, straightforward, and rapid verification method. Having become the embodiment of a positive user experience, IAV allows clients to verify their identity within mere seconds.

#2 Micro-Deposits Verification

With a deposit of fewer than ten cents, modern bank users can quickly verify bank details in their accounts by providing credentials. This method requires only routing and basic bank account information to be filled in.

#3 Third-Party Bank Verification

A check verification service is particularly valuable to organizations and businesses. The third-party bank verification method can use multiple approaches, but most will involve checking negative account history, databases, routes, and account numbers.

Just like you can verify bank details, an identity verification option is also available. Knowledge-based, credit bureau-based, and two-factor authentication are only a few of the account verification service methods offered by financial service providers. This procedure is necessary to identify a person behind a certain account. At any rate, both authentication and verification maximize your cybersecurity as you make online payments.

Account Verification in Different Scenarios

Account verification doesn’t always imply a process related to banking operations. This process is also performed on platforms like YouTube, Gmail, Facebook, and other digital platforms. Be it Google account verification or logging in on WePay, the idea behind it remains the same—certain service or product providers are willing to make sure that a person asking for access is the one whom they pretend to be.

While providing selfies, passwords, and logins meet the requirements for low-risk operations when it comes to verifying risky transactions, services like VideoID step in. Interestingly, this technology takes advantage of artificial intelligence in tandem with video streaming. Together, they help banking organizations identify customers within a few seconds.

Nowadays, no one is surprised when a provider of any digital services or products asks customers to verify their accounts. For example, when it comes to Facebook account details verification, you can request a blue verified badge that confirms your identity as a page owner. The same goes for YouTube or Twitter verification. The most common scenario for this bank verification process implies complying with terms of service. Sequentially, these require you to provide a real full name along with a government-issued ID photo.

#1 Virtual Bank Account for PayPal Verification

PayPal is by far one of the most famous payment platforms in the global marketplace. Before gaining access to a broad range of financial services available, you have to register and use bank verification services. There’s no need to explain that virtual bank accounts allow customers to make use of banking operations without having to visit brick-and-mortar institutions. By verifying it, you get non-resident bank accounts in Europe and the US to conduct transactions on B2B platforms.

Nevertheless, can you send money from a bank account without verification? The short answer is yes. Most online payment systems like PayPal provide customers the opportunity to receive, withdraw, or send limited amounts of money without verification. But if you want to reap the benefits of the PayPal bank account verification system, pay attention to Payoneer, a US virtual bank account developed to assist you in this procedure.

#2 Verification with Dwolla

As a client-side JavaScript library, Dwolla offers a helping hand in bank account verification software to smooth customer onboarding. To minimize risks associated with ACH returns and fraud, Dwolla functions as a reliable solution for businesses. This software allows users to actualize instant debit card and micro-deposit bank account verifications.

Security is the primary asset for all modern fintech organizations, meaning that ensuring safe transactions is a top priority. Not only does Dwolla help improve user experience thanks to quality CSS, but it also reduces client data collection, requesting exclusively essential account details. The latter is becoming more significant as more privacy-related concerns arise in different global communities.

#3 Account Verification Procedures at Skrill

If you have a smartphone, you can easily download the Skrill application to obtain faster verification opportunities. By uploading photos of your valid government-issued ID, you can quickly verify your account to increase transaction limits, gain access to new deposit options, and ensure security. Similarly, a driver’s license is also okay to verify your ID for Skrill.

When you try to verify your account for the first time, the app will ask you to deposit some funds, which will remain in it, so registration itself is absolutely free. Beyond question, just like any other leading company in its industry, Skrill has a well-crafted loyalty program. After joining the Knect program, customers can earn 1 point for every transferred euro (for UK customers). They can redeem these points for cash when a sufficient amount is collected.

Wrapping Up

It doesn’t matter what verification method you choose because they’re all programmed to ensure the confidentiality and security of your funds. However, the importance of such methods is hard to overestimate. Bank account verification can become a savior for your business in times of crisis and will definitely protect your users’ financial integrity and sensitive data security.

Over the course of 15 years, DashDevs has helped over 500 projects resolve security and trust issues. If you’re interested in choosing or integrating an account verification procedure into your business, feel free to contact the DashDevs support team and receive quality assistance with your undertaking!