Fintech Magazine reported about Bank of America’s launch of an account validation tool for its corporate and public sector clients. Many think of account validation tools as a means for merchants to make sure that the card credentials they have for a purchaser are legitimate and current. This is different. The BofA solution allows the client to verify the status of a transaction account and authenticate the account owner. There are three key benefits: the first one is helping to prevent fraud; the second is to ensure payments or debit are sent to the correct account, reducing errors and expediting payments; and third is that this also will help clients to comply with Nacha’s WEB debit account rule. This could also play a role in the future as more opportunities open up for open banking.
From the article:
“With fraud on the rise, companies can no longer make assumptions about whether the person or entity on the other end of a payment is who they say they are,” said David Kretz, head of Global Payments in Global Transaction Services at Bank of America. “Account Validation and other fraud prevention tools are essential for today’s treasury teams.”
A key component of Account Validation is its ability to respond to clients’ inquiries in near real-time. Companies can use the service prior to making payments to consumers via ACH, wire transfer, or a real-time payment. Additionally, Account Validation could help companies to comply with the NACHA WEB Debit Account Validation rule.
Account Validation also assists in helping prevent misdirected payments, which occur when a payee inadvertently provides an incorrect account number.
“Account Validation can help companies prevent fraudulent payments without compromising on speed for valid payments to vendors and contractors,” said Stephanie Wolf, head of Financial Institutions Sales and head of Business Banking Sales in Global Transaction Services at Bank of America. “By reducing misdirected payments, companies will also save a considerable amount of time and money it takes to attempt to retrieve misdirected payments.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
