Bank Account Verification

In order to ensure the highest possible payment success rates and to meet industry obligations, Check verifies bank accounts for correctness and ownership. The correctness check (also known as ‘validation’ in our API), ensures that the bank account provided is a real one. The ownership check (also known as ‘verification’ in our API), ensures that the entity providing the bank account information owns that bank account.

While validations are required for all bank accounts, verifications are only required for bank accounts that Check wants to pull funds from (or debit). This means that:

  • Company bank accounts are both validated and verified
  • Employee and Contractor bank accounts are only validated

How validations and verifications work

There are two ways a Company, Employee, or Contractor can connect their bank accounts to Check:

  1. by using Plaid — this is called a plaid_bank_account
  2. by providing routing and account numbers — this is called a raw_bank_account

Plaid bank accounts

When connecting a plaid_bank_account, accounts are automatically validated and verified by Plaid — this is the most seamless way of connecting a bank account. Plaid bank accounts can be created using Check Onboard, or by sending Check a Plaid processor token.

Raw bank accounts

Validations
Check automatically validates all raw_bank_accounts as soon as they are created. This is done by initiating a $0 ACH payment to the raw_bank_account. These $0 ACH payments are not visible to the account holder. If the payment fails (typically within 2 banking days), the validation check fails and the raw_bank_account is disabled. Check assumes that the account is valid unless this $0 transaction fails.

Verifications
In order to verify a raw bank account (only required for companies), you must email one of the following documents to [email protected] with a reference to the bank account ID or company ID in the email:

  • Bank account statement
  • Voided check

We are working on launching both UI components and API-based file-upload endpoints to programmatically accept and verify these documents.

Recovering from failed validations and verifications

Validation
Bank account validation failures happen when incorrect bank account information is provided. When bank account validation fails, the bank account is moved to a disabled_irrecoverable state and any attempt to move money in or out of the account will result in the payment being rejected by the bank.

In order to recover from this, the account must be replaced with a new bank account your user provides. This new bank account will be validated as soon as it is created in our systems.

Verification
Bank account verification might fail if the documentation provided is incorrect or if it fails our fraud checks. When this happens, bank accounts stay in the disabled_recoverable state. In order to successfully verify a bank account, updated documentation should be provided. You may also update the bank account to a different bank account and provide documentation for the new account.

Validations and Verifications in the API

The status and disabled_reason fields in the bank_account object and bank_account webhook can be used to determine the validation and verification state of a bank account.

Bank accounts can be used to process payroll as long as they are not in a disabled state. This means that

  • Bank accounts cannot be used in payroll if status is disabled_recoverable or disabled_irrecoverable
  • Bank accounts can be used for payroll if status is validation_pending, validated or ownership_verified

Employee bank accounts
Employee bank accounts start off in a validation_pending state and can move to validated if validation is successful or disabled_irrecoverable if validation fails.

Employee and contractor bank verification flowEmployee and contractor bank verification flow

Employee and contractor bank verification flow

Company bank accounts
Company bank accounts start off in a disabled_recoverable state. Once the supporting documents are verified, they move to a validation_pending state and then to a ownership_verified state if validation succeeds or disabled_irrecoverable if validation fails.

Company bank verification flowCompany bank verification flow

Company bank verification flow

Failure reasons
When bank accounts are disabled, you can tell your users the reason the account is disabled by looking at the value of the disabled_reason parameter. Possible values here include:

  • validation_failed: the bank account failed our validation process and a new bank account must be provided
  • failed_payment: an attempted payment to this bank account has failed and a new bank account must be provided
  • verification_pending: verification is in progress (company bank accounts only). If the verification documents have not been already sent to Check, they should be emailed to [email protected].
  • verification_failed: verification has failed (company bank accounts only) and a new bank account or new verification documents must be provided.

Documentation around the values these fields can contain can be seen in our API reference here.


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