Unlike the credit card arena, the ACH world lacks an authorization component. Essentially, a merchant knows they are getting paid at the point of sale because credit cards allow you to authorize at the time of payment that the customer has the requisite funds on their cards. This reserves those funds for capture and settlement.
Because the ACH world lacks the verification component present with credit card payments, knowing How to Verify a Business Bank Account is a priority for businesses in the ACH realm.
Many business compensate for this lack of authorization buy implementing a Checking Account Verification system to mitigate payment acceptance risk. Without an ACH Verification System obtaining your new customer’s valid checking account information can be a hassle.
Merchants can significantly reduce their check acceptance risks by understanding How to Verify Business Bank Accounts, and Verification tools can reduce payment acceptance risk by validating the customer’s bank account in real-time.
Verification options typically range from negative databases and automated routing number checks to basically real-time inquiries into current account status and checking account balance inquiries.
How does one know that a check is verified?
Most third party entities that offer a Checking Account Verification Service utilize routing account number validation and negative databases. The bank routing number identifies the bank the check is drawn against.
The databases holding this information can be checked in real time. Negative databases are basically a history of checking account info, with retailers contributing data to the network. Recency becomes an issue because the customer’s last written check at a participating retailer is the last data point, meaning that data can be out of date.
An ATM network is the next level of the ACH Verification Process. The network is created by data contributed by banks and Credit Unions. Daily uploads on account status are made to the network, and queries to the network can provide account insight. Check verification inquiries come with an almost immediate response. These responses can tell you that the account # is invalid, the account is closed, the account is in an NSF status: For some businesses this is important as they do they know they have a good account, and that the account is non DDA eg Home Equity checks.
Understanding How to Verify Business Bank Account and Implementing a Checking Account Verification Service can dramatically reduce bad check acceptance and the workflow problems they create.