What is Bank Account Verification and Why Should I Care?
Build a secure, scalable process into your payment workflows—without losing your mind (or your money).
by Ashley Poynter
Content Manager
PaymentWorksWhat is Bank Account Verification and Why Should I Care?
Picture this: You’ve just approved a $150,000 payment to what you thought was a long-time vendor. You sip your coffee, breathe a sigh of relief, and go on with your day—until a few weeks later, you get a call from the actual vendor asking where their payment is. Cue the record scratch and sinking feeling in your gut.
Turns out, you just paid a fraudster.
This is not an exaggeration. It’s real life. And it happens more often than you think.
At the center of this disaster? A simple, often-overlooked step: bank account verification. It’s the process no one thinks about—until it fails spectacularly.
So, let’s break it down:
- What bank account verification actually is
- Why skipping it could cost you your job (no pressure)
- What a secure, modern approach looks like
- And how to build this into your business process without creating chaos
Table of Contents
First Things First: What Is Bank Account Verification?
Why You Should Care (Yes, You.)
What “Good” Bank Account Verification Looks Like
The Most Common Bank Account Verification Pitfalls
So, What Should Bank Account Verification Look Like?
Bank Account Verification is Non-Negotiable
Get Ready for Vendor Management Day 2025
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First Things First: What Is Bank Account Verification?
Let’s ditch the jargon and keep it simple.
Bank account verification is the steps you take to confirm that a bank account is real (e.g. legitimate) and that it belongs to the entity you intend to pay—before any money leaves your bank.
It sounds basic, and in theory, it is. But in practice? It’s riddled with complications. This isn’t just checking that a routing number exists. It’s confirming that Vendor X’s bank account is actually owned by Vendor X—and not by Vlad the Fraudster, who spun up a fake email and created some convincing documents using a free online template.
There are a few common ways businesses attempt this:
- Microdeposits – Sending a couple of cents and asking the vendor to verify the amount. Not bad, but slow and easy to fake.
- Voided checks and bank letters – Ah yes, the two most forgeable documents on the planet.
- Phone calls – “Hi, can you tell me your bank account over the phone?” Because nothing says secure like sharing financial info via a random call.
- Automated third-party verification – Tools that check submitted info against verified databases in real time. Ding ding ding! We have a winner.
The stakes? High. The margin for error? Slim. The fraudsters? Very, very creative.
Why You Should Care (Yes, You.)
Still not convinced this matters? Let’s zoom in on what happens when bank account verification goes wrong.
1. Fraud Loves a Loose Process
Fraudsters are savvy. They don’t need a crowbar to break into your system—they just need an email address and some patience.
In fact, the FBI’s Internet Crime Complaint Center (IC3) reported that business email compromise (BEC)—a fraud scheme that often involves fake vendor banking info—has cost companies $55 billion globally between 2013 and 2023. That’s billion. With a “B.”
These scams often start with a believable email:
“Hey, just wanted to update our payment details for future invoices. Here’s our new account info. Thanks!”
If that email lands in the inbox of someone who isn’t trained—or worse, someone in a hurry—you might as well send money directly to the fraudster’s vacation fund.
2. Compliance Doesn’t Care About Excuses
If you’re in a regulated industry like healthcare, education, or finance, verifying vendor identity isn’t just a good idea—it’s required. Forget to verify bank details and send money to a blacklisted entity? That’s not just an “oops”—that’s a potential violation of OFAC or other regulations.
Penalties can range from steep fines to reputational nightmares. And spoiler alert: “I thought the email looked legit” is not going to hold up during an audit.
3. Lost Money = Double Payments
Here’s a fun twist: if you fall for a fraud scheme and send money to the wrong account, you still owe your real vendor. That’s right—you’re on the hook twice.
So now, not only have you lost $50K (or $500K… or more), but you also get to dig into the couch cushions to find another stack of cash to pay the actual invoice.
Still feeling lucky?
What “Good” Bank Account Verification Looks Like
We’ve established what not to do. Now let’s talk about what “good” bank account verification looks like in the real world.
1. Automation Over Intuition
Human beings are wonderful. But when it comes to spotting fake bank letters or deciding whether an email “feels off,” we’re not always reliable.
The best approach is one that doesn’t rely on human judgment at all. Automation ensures every vendor is vetted the same way—every time. No shortcuts, no gut feelings, no one-off exceptions.
2. Third-Party Verification Tools
The gold standard for bank account verification is leveraging tools that can:
- Confirm bank account ownership with the actual financial institution
- Cross-check tax IDs and legal names
- Flag mismatches or anomalies in real time
- Create a secure, auditable trail of every verification
Bonus points if your tool comes with ACH indemnification—meaning if something does go wrong, the provider assumes the financial liability. (Insert angel chorus here.)
3. An Audit Trail Even the IRS Would Admire
Being able to say, “We verified that bank account,” is one thing. Being able to prove it is another. Your process should log:
- Who submitted the banking info
- Who approved it
- What system validated it
- When it was approved
- What the outcome was
Why? Because if fraud does occur, this audit trail helps identify the breach point—and protect the people who followed the process.
The Most Common Bank Account Verification Pitfalls
If you’re reading this and thinking, “Well, we do verify bank info… sort of…”—you’re not alone. But partial verification is like locking the front door and leaving the back wide open.
Here are the most common pitfalls:
Accepting Voided Checks or Bank Letters
These are ridiculously easy to forge. If your process relies on these documents, fraudsters are already three steps ahead.
Instead: Use automated validation tools that work directly with the banks.
Trusting Email Confirmations
Fraudsters spoof email domains, mimic signatures, and even respond to past threads. Email is convenient, but it’s not secure.
Instead: Route all communications through a secure portal with multi-factor authentication.
Verifying Bank Info After It’s Already in the ERP
If you’re verifying after the data has been entered, you’ve missed your window. That account is now “trusted,” even if it’s fake.
Instead: Verify before any data enters your system. No verification = no payment setup.
So, What Should Bank Account Verification Look Like?
Look, no one wants to be the person who “meant well” but green-lit a fraudulent payment because the process had more holes than a slice of Swiss cheese. The good news? Fortifying your vendor payment process doesn’t require a full systems overhaul—just a strategic mindset shift and a commitment to doing things smarter, not harder.
Here’s how to get started:
Step 1: Document Your Current Process
You can’t fix what you haven’t mapped. Start by charting your actual bank account verification process—not the idealized version you think is happening, but the steps that people are actually taking.
Ask:
- Who collects the vendor’s banking info?
- Where does it go next?
- Who approves it?
- What’s the timeline from submission to payment?
Bonus points for identifying where manual handoffs, email threads, or verbal confirmations sneak in. (They’re almost always there. Like glitter.)
Step 2: Centralize Ownership and Responsibility
In too many organizations, vendor management is like a hot potato—passed from procurement to AP to someone in accounting who’s “always handled it.” The result? Inconsistent standards, conflicting steps, and lots of “I thought they were doing it.”
Create a clear chain of ownership. Ideally, a single team (like Vendor Management or a dedicated Integrity Team) is responsible for collecting, verifying, and updating vendor data. Everyone else? They go through them.
No more freelancers doing their own thing.
Step 3: Automate Where It Hurts Most
Let’s face it: humans are great, but we’re not built for high-volume, high-risk data validation. That’s what machines are for.
Automate steps like:
- Vendor data collection (via secure portals)
- Identity verification (legal name, TIN, bank account ownership)
- Approvals and workflows
- Change notifications and alerts
- Audit trail creation
Think of automation as the gatekeeper—no one gets in unless they pass every check. You’re not being difficult. You’re being diligent.
Step 4: Use Verified, Third-Party Validation Tools
Forget relying on PDFs, emails, or “trust me, it looks legit” logic. Today’s fraudsters have Canva and ChatGPT too.
Use tools that verify:
- Bank account ownership
- Tax ID authenticity
- Business legitimacy
- Sanctions and compliance status
Bonus: Some platforms (like PaymentWorks 👋) offer ACH indemnification, so if something does go sideways, you’re not on the financial hook. That’s next-level peace of mind.
Step 5: Establish a Tamper-Proof Audit Trail
In the event of a fraud incident—or just a routine audit—you want to be able to say, “Here’s exactly what happened, when, and by whom.”
Make sure your system:
- Time-stamps every step
- Logs who submitted and who approved
- Stores all documentation securely
- Notifies you when updates are needed (e.g., expired insurance or updated banking)
- If your current “audit trail” is a shared inbox or a sticky note, it’s time to level up.
Step 6: Review Your Insurance—Seriously
Don’t assume your cyber or crime insurance covers vendor payment fraud. Many policies don’t unless you’ve added riders for:
- Social engineering attacks
- ACH fraud
- Human error (yep, it happens to the best of us)
Talk to your risk management or finance teams and make sure your policy reflects today’s threat landscape. Also: budget a reserve fund for fraud-related losses. If you do get hit, you’ll still need to pay your real vendor—twice if necessary.
Step 7: Train Your People Like They’re the Firewall (Because They Are)
The fanciest tech in the world can be undone by one person who clicks “reply” to a spoofed email.
Train your teams to:
- Spot social engineering red flags
- Always follow your documented process
- Challenge odd or urgent banking change requests
- Use “zero trust” when it comes to email-based updates
Make training part of onboarding, ongoing education, and (this is key) reinforce it regularly. People forget. Fraudsters don’t.
Bank Account Verification is Non-Negotiable
Bank account verification may not be flashy. It doesn’t come with confetti or end-of-year awards. But it might just be the control that saves your organization from a six-figure mistake.
In today’s landscape of vendor impersonation, social engineering, and email compromise, verifying bank account ownership is non-negotiable.
So, do yourself (and your budget) a favor:
- Automate your process
- Don’t trust email
- Stop accepting forged docs
- And please—for the love of finance—verify before you pay
Get Ready For Vendor Management Appreciation 2025
Yes, we wrapped our second annual Vendor Management Appreciation Day (VMAD)—and YES, the party’s far from over. We’re already making plans for 2025… are you in?
Because let’s be honest—vendor management doesn’t get nearly enough love for the critical role it plays in keeping organizations running smoothly (and safely). That changes here.
🎉 Mark your calendar. Stock up on snacks. VMAD 2025 is coming—and you won’t want to miss it.
VMAD is a new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.
Moreover, we’ve released gifts each month to help you supercharge your vendor management efforts. Additionally, we’re planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.
In the meantime, learn more here, and grab some free vendor management goodies.
Want Help Aligning Teams On Bank Account Verification?
Explore our blogs below. They’re filled with action items you can implement right away.
Why a Weak Vendor Identification Process at Onboarding Makes You Vulnerable to Fraud
Vendor Verification: How NOT to Do it and What to Do Instead
The New Face of Vendor Fraud Cases
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