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Risk Verification

Jul 11, 2017 Walt Wojciechowski

Risk Verification

Running a successful business requires both exposure to and mitigation of risks. One particularly risk-prone aspect of operation involves conducting non-cash customer transactions.

However, companies that implement robust risk verification tools can screen someone's banking information before conducting business, providing confidence in accurately assessing the person's ability to pay.

Why do you need risk verification?

Automatic clearing house (ACH) transactions have surged in recent years, and as people continue to make online and cashless payments, these numbers should only continue to rise. According to data from the U.S. Federal Reserve's Payments 2016 Study

U.S. noncash payments, including debit and credit cards, ACH and check payments grew from around 21 billion payments worth $17 trillion up to 144 billion with a value of nearly $178 trillion between 2012 and 2015. This represents an annual rate of 5.3 percent by number or 2.4 percent by value during this three-year period.

Not only has the number of these transactions risen, so too has the speed by which they're processed. As noted by American Banker, whereas banks used to have two to five days to perform a risk analysis of suspicious transactions, this window has shrunk to two hours in some instances.

This is taxing banks' capacity to identify fraudulent transactions in a timely fashion. 

Who should use risk verification?

In light of this recent trend, it's become incumbent upon merchants, retailers and other commercial enterprises to boost their risk verification capabilities.

Any merchant, retailer or other commercial enterprise that relies on the bank routing and account numbers of a checking account for transactions needs to have the means to independently verify potential risks.

Risk verification works as a useful tool

Merchants and retailers need to know immediately if an electronic check or ACH debit will process without returning. It's simply not enough to rely on a financial institution to provide accurate and rapid feedback on the inherent risk involved with a particular bank account. 

Using a risk verification tool gives these companies the ability to check the historical data on a bank account and compare it against a vast database of more than 1 billion records. This type of alternative credit check reveals whether a potential customer has a record of fraudulent activity or insufficient money to cover an ACH, electronic check or remote deposit capture (RDC) transaction, without having to wait on a bank's response.

How MicroBilt can help

From providing a cross-institutional view of consumer banking activity to analyzing a database of more than 1 billion records, MicroBilt has the risk verification software companies need to reduce their exposure to fraudulent transactions.

MicroBilt's Risk Verification Database (rVd) comes in three versions: Basic, Advantage and Plus.

Risk Verification Database Basic

  • Leverages MicroBilt's database of more than 1 billion real-time consumer records, including under-banked or "thin-file" customers with little or no previous credit history.
  • Matches consumer names and provides known telephone numbers.
  • Generates the consumer's account history, providing merchants with a list of both cleared and returned transactions.
  • Includes age of account and previous rVd activity.

Risk Verification Database Advantage

  • rVd Advantage includes everything covered by the rVd Basic, but also validates whether the account structure for the issuing bank is correct.
  • Additionally, rVd Advantage automatically updates consumer accounts multiple times a day.

Risk Verification Database Plus

  • Similar to rVd Advantage, rVd Plus includes everything the other services provide, with the additional identification of closed, pending-closed and frozen bank accounts.
  • rVd Plus also predicts and identifies unauthorized and administrative returns before they occur.

With MicroBilt's extensive Risk Verification Database at its disposal, an organization that accepts ACH, RDC, electronic checks and more can successfully manage their risk portfolio and avoid the burden that comes with onerous returns.

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