Rethinking bank account verification in a real-time payments environment

As real-time payment capabilities expand across the U.S. financial system, credit unions are rethinking how bank account verification fits into their payments strategy. Traditional validation methods were designed for slower payment rails and multi-day settlement cycles. But today’s members expect payments to move instantly and with minimal friction.

At the same time, faster payments have significantly compressed the window institutions have to verify accounts and assess risk. What once occurred days before a transaction may now need to happen in the same moment a payment is initiated.

These dynamics were explored during the webinar Smarter Bank Account Verification, Better Risk Management, where Stuart Bain, SVP of Product Management at Alacriti, examined how verification strategies are evolving as instant and same-day payment rails become more widely used.

Nearly two-thirds of respondents of a poll conducted during the webinar agreed that the biggest challenge related to bank account verification is: preventing fraud while maintaining a smooth experience.

Other responses included supporting instant payment rails, managing compliance requirements, and reducing payment failures. The results showed that fraud prevention remains a top priority, but members expect payment experiences that feel immediate and intuitive. If verification processes introduce delays or friction, transactions may be abandoned or redirected to alternative providers.

One reason this tension has intensified is that payment behavior itself is evolving.

Across both consumer and business use cases, immediacy without friction has become the baseline expectation rather than a premium feature. One-time payments, last-minute bill funding, and alert-driven payment actions are increasingly common.

Recent data discussed during the webinar reflects this shift. More than half of U.S. consumers made at least one late payment in the past year, often driven by timing constraints rather than intent. However, reminder-based payment experiences are driving faster completion rates—especially those delivered through text notifications with embedded payment links.

These patterns suggest that many payments now occur at the moment of awareness. When members receive a reminder or realize a bill is due, they expect to be able to complete the transaction at that moment. When verification processes delay payment completion or require users to return later—sometimes days later—they no longer align with how payments are initiated today.

The rapid growth of instant payments is reinforcing this trend. Bain pointed out that approximately 70% of financial institutions now support real-time payments in credit transfers.

As more institutions connect to real-time networks, the standard for payment experiences continues to rise. If a payment can move instantly, members increasingly expect the entire process—including account verification—to occur just as quickly. At the same time, faster rails change the risk dynamics for financial institutions. Real-time payments remove the settlement delays that historically allowed institutions to detect errors or suspicious activity after a transaction occurred. Instead, risk decisions must be made earlier in the payment process.

A key concept discussed during the webinar was the difference between validation and verification—two terms that are often used interchangeably but represent very different levels of assurance.

Validation confirms that an account number and routing number are structurally correct. Verification confirms that the person initiating the payment actually owns the account. Bain summarized the distinction this way: “Validation is just the basic check that the account number is valid for the routing and transit number that’s been put in. Ownership verification goes further by confirming control of the account.”

This distinction became particularly important following the Nacha Web Debit Rule implemented in 2021. This rule requires validation for new accounts used in web-based ACH payments but does not mandate a specific method to confirm ownership.

While this requirement established a baseline for compliance, it does not fully address the challenges introduced by faster payment rails. As settlement times shrink, institutions need greater certainty earlier in the payment lifecycle.

Financial institutions currently use several approaches to confirm account ownership. Manual methods—such as requesting check images or bank statements—are still used but can introduce delays and operational complexity.

Challenge deposits provide a more automated approach. Small transactions are sent to the account, and the user confirms receipt to verify access. Traditionally, these deposits rely on ACH credits, which can take several days to settle.

Credential-based verification offers another option. In this approach, members authenticate through their financial institution’s digital banking platform, allowing ownership to be confirmed through secure login credentials.

Because each method has limitations, many institutions use a layered approach. Credential-based verification may be attempted first, with traditional ACH deposits serving as a fallback when needed.

Instant payment networks are changing the mechanics of challenge deposits. When a receiving institution supports real-time credit transfers, verification deposits can be sent and confirmed almost immediately. This eliminates delays associated with traditional ACH-based deposits.

Legacy approaches often require customers to wait multiple days for confirmation. Bain noted that this delay can become particularly frustrating when accounts are added outside standard processing windows: “It could take a few days, especially if the account’s added at the weekend.”

Real-time rails provide much faster clarity. If a transaction is rejected, institutions know immediately. If it succeeds, verification can proceed without interrupting the user experience. The result is a significantly smoother process for members, who can add accounts and complete transactions within the same digital session.

Moving verification earlier in the payment lifecycle provides several strategic advantages:

These improvements help reduce call center volume, exception handling and manual operations over time.

Ownership verification can also strengthen competitive positioning. As real-time payment capabilities become more common, members become increasingly aware of whether their financial institution supports modern payment experiences.

For business members, verification plays an equally important role. Industry research (Datos Insights Q1 2024 U.S. Cash Management Survey) discussed during the webinar found that more than 90% of businesses are concerned about payments fraud, yet many still rely on checks because digital verification capabilities remain inconsistent.

As faster payment rails continue to expand, account verification can no longer operate as a background process or a post-transaction safeguard. Instead, verification is becoming an integral part of the payment journey itself—one that enables institutions to reduce fraud exposure while supporting the seamless digital experiences members expect.

For credit unions, strengthening ownership verification may prove essential to balancing speed, security, and member satisfaction.

To learn more about how financial institutions are approaching this challenge, watch the full webinar,  Smarter Bank Account Verification, Better Risk Management.

Alacriti’s Orbipay Bank Account Validation & Verification Serviceoffers financial institutions and enterprises a modern validation & verification service that can be used to meet compliance requirements, reduce the incidence of issues when processing bank account payments, and form a key part of their payments fraud & risk management strategy. To speak with an Alacriti payments expert, please call (908) 791-2916 or email info@alacriti.com. To request a demo, go to alacriti.com/demo.