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Best Practices for Account Verification Procedure


9 min read

In the face of fintech software development practice, account and identity are almost the same. Related institutions empowered to monitor banking activities don’t recognize individuals or organizations—they process transactions.

However, before validating any notable digital movement, they need to verify your identity. Fortunately, present-day banking operations are easier to perform with the help of checking account verification systems: selfies, voice biometrics, or fingerprint matching. IT companies invest millions of dollars in researching the boundaries of artificial intelligence, machine learning, and deep learning to offer more value for fintech customers as they thread their way through multiple security layers.

Nowadays, it’s no surprise that we need to do our account name 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.

Following the COVID-19 pandemic, the financial industry is transferring its activities to a remote mode of operation to minimize the red tape as well as limit interpersonal communication.

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. Since traditional verification practices are subject to multiple errors, presuppose slow performance, require personal presence, and rarely offer a quality user experience, no wonder why they’ve been replaced by remote verification. But does everything go like clockwork?

Bank Account Verification: Algorithms Against Fraud

Have you ever heard about NACHA and AML/KYC guidelines?

These regulations keep financial services providers within the borders of legal activity. Standing for National Automated Clearing House Association, NACHA aims to manage the ACH Network by establishing standards for e-funds 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 as well as artificial intelligence to analyze physical biometrics or any other customer data.

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

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. Besides, 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 work on algorithms that identify facial biometrics as well as detect liveness to eliminate illegal transactions.

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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 making sure that it’s the real, verified person who’s trying to conduct a certain transaction.

What Is Bank Account Number Verification?

Bank account number verification is a nitty-gritty of the technology banks use 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.

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

One of the most frequently asked questions in the context of bank account verification online (either for visa or immigration) is how to get a bank account verification letter. Let’s answer it briefly. In the US, any client may receive a letter from any banking institution as soon as they lodge the request via a call or during communication in a chat. Usually, you can withdraw this letter within three days from your bank.

Account Verification Types

Terminologically, account verification system encompasses the process of confirmation by an entity that a particular user indeed owns and operates their account. Moreover, it concerns not only bank accounts or other digital spaces containing sensitive information but also 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:

  • Banking verification;
  • Biometric verification;
  • Identity verification;
  • Behavioral verification;
  • Email verification;
  • Postal address verification;
  • 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:

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.

Micro-deposits verification

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

Third-party bank verification

In particular, a check verification service is of peculiar value to organizations and businesses. More specifically, 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 account verify, 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 somewhat touching upon banking operations. Not at all. We do the verification account when using 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. In most cases, if you’re already registered, typing in login and password is enough to gain access to Facebook, Gmail, or Twitter.

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.

Nonetheless, having undergone these procedures, you’re not guaranteed to get the verification badge. In case you’re interested in how to get verified on Instagram or request verification from a Microsoft account, most scenarios will remain similar enough. This is needed to unify and simplify registration or verification processes. Technologies are meant to simplify our lives, aren’t they?

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.

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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.

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

Of all errors made during money transfers, typing in the wrong digit is one of the most frequent for account verification bank. That happened to Peter Teich when he lost his £193,000 inheritance for the same reason, having sent a considerable sum to a stranger who refused to return it.

And that’s another reason why you need to verify all your accounts to keep transactions secure and minimize the odds of similar errors. Furthermore, it doesn’t matter what verification method you choose because they’re all programmed to ensure the confidentiality and security of your funds.

If you’re still wondering “what is bank verification” and 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!


What is bank verification?

Account verification is a procedure used in financial services to help organizations confirm the identity of bank accounts. In certain circumstances, this is done to meet regulatory obligations or to decrease the possibility of fraud or any other issue.

Why is account verification important?

It protects organizations from user mistakes by removing the difficulties (and possibly costly admin labor) associated with tracking down and clearing up mistakes caused by invalid bank account numbers or incorrect charges.

But, more crucially, it protects companies against individuals with dubious intents, ranging from those who want to push their payment onto another person to those who conduct major fraud. This is not only potentially costly but also extremely dangerous.

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