Bank Account Verification Process: Step By Step Explanation

Bank Account Verification Process: Step By Step Explanation

Bank account verification checks if a bank account already exists and matches the recipient’s name with the name of the bank to prevent failure or transfer chargebacks. In many areas, identity verification is mandatory to set up a bank account or any other financial account. 

How is Bank Account Verification Done?

Identity verification in the financial sector is often required by regulations such as Know Your Customer (KYC) and Customer Identification Program, which is a United States requirement. The verification is done to prevent financial transactions that may promote criminal purposes. Two main concerns are anti-money laundering and terrorist financing (AMLCTF). Also to protect the privacy of the user. The ACH verification procedure is a digital security measure used by merchants to limit financial risk while processing check payments at the point of sale, whether online or in person. The verification method allows merchants to check a customer’s bank account in real-time, lowering the number of incorrect or fraudulent transactions.

How does KYC help in Bank Account Verification?

KYC is a method that allows financial organizations to confirm the legitimacy of their customers. Customers of financial services businesses must provide KYC documents to verify their names and addresses before investing in various products through the financial institution’s portal, such as time deposits, mutual funds, bank accounts, and so on. 

KYC is vital since it helps to keep financial institutions from being used for money laundering. Money laundering is frequently carried out without the knowledge of the tax authorities in the jurisdictions where the platform is used for such purposes. Banks can detect possible money laundering by using KYC online verification and offline KYC authentication. The KYC is also significant because many non-personal clients utilize financial services like transactions and investment trusts. 

KYC is done in the following ways:

  • Aadhar-based KYC is an online verification method that uses your Aadhar number. This sort of KYC necessitates the submission of a scanned copy of the original Aadhar card, as the name implies. The drawback to this method is that while investing in a mutual fund, there is a limit of Rs 50,000. However, there is no such limit if you are getting your KYC done offline.
  • The personal verification KYC is conducted offline. Customers can utilize Aadhar biometrics to authenticate their identification at a KYC kiosk or an investment fund house. You can also contact the KYC Registration Authority and have a representative come to your home or workplace to do this review. For KYC, some trusts additionally provide personal video call verification. You must submit the genuine Aadhar card as well as proof of address.

What are the steps in Bank Account Verification?

Here are the steps for bank account verification by businesses or individuals:

  1. Collect details

You will need the account holder’s name and account number, as well as the nine-digit bank routing number. In general, a fee-based service will verify not just the validity of a bank account, but also whether it is a checking or savings account, the account’s opening date, and the account holder’s name.

  1. Select a suitable platform

If you require more information, such as when verifying an account as part of a credit application, you can pay for online verification. Various online platforms do bank account verification service without any charges such Cashfree, Recticel, Veriff, and many others. 

  1. Input the required details

The information that you collected about the account or accounts that you need to verify shall come in handy in this step. On the platform, input the details and follow the needful process.  

  1. Verification through the ACH system 

Businesses that accept electronic payments can access a customer’s bank account, verify details, and transfer funds in real-time using the Automated Clearing House network. An ACH system creates a network of cooperating financial institutions. 

Validation services can cover both current and historical data and are accessible both in-person and online. The service first verifies that the account is active and in good standing. The second stage of validation looks for bounced checks in the customer’s record.


No comments yet. Why don’t you start the discussion?

Leave a Reply

Your email address will not be published. Required fields are marked *