Fraud is one of the scariest things that can keep a business owner up all night. Financial fraud can break your business even before it lifts off. FTC (Federal Trade Commission) study shows that merchants lost nearly $5.8 Billion to fraud in 2021 (almost a 70% increase compared to 2020). The government received about 2.8 Million fraud reports throughout the year.
Business owners that do not adopt fraud prevention mechanisms such as bank account verification early on are at a significant risk today.
Bank account verification is one of the most popular ways to prevent fraud while carrying out financial transactions. It is essentially a way for a financial institution to verify an individual’s bank account information, aka account details. This system is mainly used with ACH and credit card payment technologies.
The best bank account and check verification systems can verify account ownership with just a few pieces of information. Moreover, they maintain an active negative data database to complete the verification process in real-time! Such instant systems help the merchant reduce wait times and offer a better user experience.
Knowing this, see why Nacha, the organization that manages the administration, development, and governance of the ACH network, takes action to set standards like account validation.
Merchants should ideally invest in the best possible common account verification systems when setting up their financial processes. These systems help the merchants:
Apart from merchants, government officials, credit reporting agencies, and employers use these systems to reduce risk and verify their transactions periodically. Companies that deal with a high amount of returned transactions face the risk of financial penalties and ultimately losing access to the ACH network altogether.
Partnering with a payment gateway helps you accept payments through multiple methods like ACH and credit cards and offers a bank account verification on top of it. Once you have adopted such a system, you can start checking the account information and validity with the following basic information:
In case of any discrepancy, the system will immediately throw a warning. Merchants look at this red flag as a sign to hold further transactions.
Merchants should ideally not compromise on these systems and look for the “cheapest” options while choosing one for their payment processes. Instead, they should look for systems that have an extensive and frequently updated database. They should also partner with payment gateways that reduces leakage of critical banking information by offering PCI compliant complementary technologies like SMS payments, IVR payments, Email invoicing, Recurring payments, Cash discount program, and more. If you seek a one-stop-shop to handle all your payment processing needs with tech-savvy tools, reach out to us here.