BlogNews & UpdatesPayment Verification: Powerful Tips for Secure Transactions (2024)

Payment Verification: Powerful Tips for Secure Transactions (2024)

Payment Verification

In our increasingly digital world, payment verification has become an essential part of business operations. It not only ensures the security of transactions but also builds customer trust and reduces the risk of fraud.

In this article, we will delve into the different methods of payment verification, the importance of account verification in preventing fraud, and how technology is transforming the way businesses verify payments.

The Importance of Payment Verification

Payment verification is crucial for preventing fraud and reducing errors in transactions. It increases security, reduces chargebacks, and enhances customer trust.

A payment processor that offers robust verification tools is critical to ensuring the safety of transactions and the trust of customers.

The Rising Threat of Fraud

Fraud is on the rise, and businesses must be proactive in combating it. In 2019 alone, 78% of B2B businesses experienced payments fraud. The surge in eCommerce and online purchasing during the pandemic has only exacerbated the issue.

Verification processes help mitigate potential fraud, track customer account information, and ensure compliance with regulations. However, the primary reason for payment verification is to safeguard funds and maintain clear records.

Traditional Methods of Payment Verification

Traditional methods of payment verification, although reliable, can be time-consuming or expensive. Here are the top three ways businesses have been verifying payments for decades:

Voided Checks

Voided checks are used to verify payment options, as they contain the bank account, routing number, and account holder’s name. However, with technology advancements allowing falsification of these details, this method is slowly becoming obsolete.


Microdeposits involve sending small amounts of money to verify the account’s activity. The recipient then confirms the amounts, verifying the bank account. While this method is prevalent and the risk is minimal, it can take up to three to five days to complete the process, making it time-consuming.


Prenotification is a $0 ACH transfer. If unsuccessful, the receiving depository financial institution (RDFI) sends a Notification Of Change (NOC) that needs resolution. While secure, this method can take up to four weeks to complete, making it rather time-consuming.

The Evolution of Payment Verification: Instant Verification

Instant verification is revolutionizing the B2B payments world. Companies like Plaid allow you to confirm your bank account information instantly, saving businesses precious time. But how does it work?

Tokenization: The Answer to Instant Verification

When a client enters their bank account login, the platform sends a token through the instant payment verification network. This token, representing the bank account’s routing and accounting number, is used to validate the account. The process takes about 10 seconds, a far cry from the typical 2-5 day waiting period for microtransactions.

Tokenization not only enables fast payment verification but also secures the client’s data while in transit and storage.

Harnessing Blockchain for B2B Payments

Blockchain technology is making its mark in the world of B2B payments. For example, Paystand has created a blockchain-based network that verifies bank account information in real time. This innovative platform covers over 90% of the US banking market and 98% of all commercial accounts, significantly reducing the risk of fraud and allowing businesses to focus on more high-value tasks.

Payment Authentication: Verifying Buyer’s Identity Before the Sale

While payment verification is crucial, so is payment authentication. This process involves verifying the identity of the party on the other end of a transaction.

The Challenge of Online Payment Authentication

Online payment authentication presents unique challenges. The anonymity of the internet makes it harder to validate customers before a transaction. However, modern payment authentication methods can help businesses validate buyers and recognize potential fraud with a high degree of accuracy.

Payment Authentication Methods

Payment authentication methods largely fall into one of four categories: ownership, knowledge, inherence, and location. Each of these methods provides a different way of authenticating the customer’s identity, and they can be used in combination for greater security.

CVV Code

Requiring customers to enter the CVV (Card Verification Value) code is a powerful authentication device. Having access to this 3- or 4-digit number means the buyer likely has the actual credit card in their possession.

Address Verification (AVS)

Address Verification Service (AVS) checks the billing address submitted by the shopper against the cardholder’s billing address on record at the issuing bank.

3-D Secure

3-D Secure Version 2.0 and later (or just “3DS2”) checks an estimated 150 verification details automatically and in real-time. Billing address, transaction history, device ID, geolocation, and more are compared to confirm a customer’s identity.


Payment card tokenization swaps the cardholder’s primary account number for an algorithmically-generated token. This digital token represents information but is meaningless by itself, offering an added layer of security.

Device Fingerprinting

Device fingerprinting creates a digital “fingerprint” of users based on the device used to access the site. This can help block devices associated with known bad actors and fine-tune your prevention strategy.


Geolocation uses wifi signals a device accessed to determine the geographic location of the shopper. This can provide vital clues for authentication and flag potential fraud.

Velocity Checks

Velocity checks scan transaction variables such as name, shipping address, and order frequency, looking for information actions within a specified time period. Too many of the same orders could indicate fraud.

The ACH Verification Process

Electronic payments sent through the Automated Clearing House (ACH) network have created a new world of sending and receiving funds. However, with increased efficiency comes added risk.

ACH Transfers Vs. Credit Card Payments

Unlike credit card transactions, where authorization guarantees that funds are available, ACH payments don’t provide that guarantee. Hence the need for an ACH verification process.

Benefits of Verifying a Customer’s Bank Account

There are many advantages that businesses can capture by adopting electronic verification services. These include less money spent on traditional check processing, reduced bounced checks, a lower return rate, and the ability to use the verification process in various payment venues.

Overview of Verifying an Account

There are multiple verification options to ensure an ACH payment is genuine. The common thread is to confirm the account information with the financial institution that holds the account. Once the bank account has been verified, the payment can be processed. This process can take a few seconds or a few business days, depending on the method used.


In conclusion, payment verification plays a crucial role in ensuring the security of transactions and building customer trust. Businesses must stay abreast of the latest verification methods and technology to combat fraud effectively and provide a seamless customer experience.

However, it’s essential to remember that no single tool can be 100% effective. A mix of various verification tactics can increase your success, and it may take some experimentation to find the right balance. As the world of payment verification continues to evolve, businesses must adapt and innovate to stay ahead.

Remember, payment verification is just one aspect of fraud prevention. It won’t help against other issues, such as friendly fraud. Therefore, it’s vital to have a comprehensive fraud prevention strategy in place, covering all potential risk areas.

Cellbunq Systems AB, Stockholm, Sweden based Know Your Business (KYB) identity orchestrator.

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