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How Instant Bank Account Verification Can Improve Lending Business

Jun 07, 2021 MicroBilt News

How Instant Bank Account Verification Can Improve Lending Business

Are you looking for solutions to increase your lending business’s security? The COVID-19 pandemic has greatly affected customers and lenders. In the first three months of the pandemic, unemployment rates rose over 11 percent.

This caused a large number of people to struggle to meet their financial debts. Lenders also saw a huge rise in the number of borrowers asking for accommodations.

Today, lenders must turn to more secure methods for conducting business. Instant bank account verification solutions may be the answer you're looking for. Keep reading to learn how this can help you make smart lending decisions.

What Is the National Automated Clearing House Association (NACHA)?

The NACHA was first established in 1974. Its purpose was to reduce fraud risks associated with online transaction systems. To do this, NACHA created a set of standards and rules.

Financial institutions in the Automated Clearing House (ACH) network follow these standards. This helped increase the security of payment transfers. ACH transactions are electronic fund transfers often between credit unions and banks.

Today, some payment services and online businesses accept payment via ACH. This requires the customer to provide bank routing and checking account numbers. The NACHA reviews, edits, and sorts these payments to reduce fraud risk.

New 2021 ACH Account Number Validation Rules

The NACHA has issued a new rule that applies to ACH debit funds beginning March 2021. The purpose is to enhance their ability to detect fraud.

This rule requires businesses to practice account validation to ensure reasonable fraud detection. Companies must confirm all submitted account information. With over 10,000 NACHA financial institutions, this is a huge initiative.

New Approaches to Bank Account Verification

The new rule includes five ways to validate accounts. They represent a wide variety of costs, user experiences, and time to complete. The following provides an overview of the options.

Manual Validation

Businesses can ask the customers to provide a voided check. Or, they can contact the bank directly to verify the routing and account numbers.

This is the most labor-intensive option. It can take up to six days to complete. Choosing this method may also reduce customer satisfaction and result in lost sales.


This method of account verification often involves two separate steps. First, the business makes one to two tiny deposits, such as a few cents, into the customer account. Next, they ask the customer to confirm these deposits.

Using this option can take up to two to three days to complete. Also, customers often don’t complete the validation process.


Pre-notification transactions involve sending a $0 ACH network transaction. The business is then notified about the accounts’ validity. This method can also take two to three days but doesn’t need any customer participation.

Customers aren’t able to make a payment until the account has been validated. The NACHA Rules require businesses to wait three days after sending the pre-notification. After that time, they can complete the ACH payments.

Database Verification

A consortium of banks may choose to maintain a database. The database stores account and routing numbers for the banks to cross-reference. This provides account verification while reducing the risk of human data entry errors.

What Is Instant Bank Account Verification?

The fifth option is instant bank account verification uses application program interfaces (APIs). The API connects to banks via a secure digital network. This allows businesses to work directly with financial institutions.

When making a purchase, the customer chooses their bank from a list provided. They must then enter their own bank login and password. The instant account verification API establishes a digital connection in seven to eleven seconds.

It directly retrieves the bank routing and account numbers without customer input. The API is also able to retrieve the account balance and transaction information. It validates the customer’s identity as well.

This process is invisible to the customer. They receive a quick verification to proceed with their purchase. Having a seamless check-out process reduces cart abandonment and increases sales.

Benefits of Instant Bank Account Verification

Lending businesses that use instant bank account verification realize many benefits. They quickly receive the valid banking information needed to complete sales. More accurate decisions related to approving lending transactions reduce their risk of defaults.

Viewing customer payment history and account data first, ensures safer lending agreements. This leads to a positive return on investment.

So, who benefits from using an instant bank account verification system? The following list provides some examples.

  • ACH processors
  • Apartment and house rental agencies
  • Banks
  • Businesses that lease products or equipment
  • Cable companies
  • Credit unions
  • Financial institutions
  • Insurance companies
  • Lenders
  • Motor vehicle financiers
  • Payment processors
  • Retailers
  • Utility companies

Any company that underwrites business loans must institute procedures to prevent fraud. Using instant bank account verification can help you analyze the applicant’s income. It also provides information about their ability to repay the loan.

This solution considers current, available account balances. It also looks at other financial loans or obligations the customer has. This solution gives you more information than you see on a typical credit report.

Now you have the tools to make accurate leasing, crediting, and lending decisions. This solution works for companies of all types and sizes.

Does Your Business Need a More Secure Account Verification Solution?

Instant bank account verification provides many options for businesses to reduce their risk. MicroBilt pioneered methods for alternative credit data space to protect businesses. We’re ready to share our 40 years of experience with you.

Our company is a registered consumer credit reporting agency. As such, our products and data meet all federally mandated regulations. We’re proud to offer the highest standards of quality, accuracy, and security.

We understand that you need verified information to make smart business decisions. Click here today to contact a MicroBilt business consultant expert to assist you.