Why is bank account validation important?
The efficiency of an automated payments process is reliant on the input of accurate data. Bank account validation is the only way to ensure that the information captured is accurate. Without bank account validation, most organisations experience a data entry error of between 2% and 8%.
The weakest link in any automated payment process is at the point where the payment details are manually entered into the organisation’s accounting, billing or payment system. If bank account validation does not take place at this time, the subsequent administration cost of resolving the error at a later stage can be significant.
Such errors occur either as a result of being provided with incorrect information in the first place or due to errors introduced at the point of data entry. It only takes one digit to be incorrect for the payment to fail which is why bank account validation is so important.
Bank account validation isn’t easy
In addition to the well-known problems associated with data entry, processing bank details can compound this further:
- Identification of account numbers is not always straightforward Although the correct information from can be found on a cheque book or bank statement, customers usually use the information printed on their payment card.
- The data required to undertake bank account validation is constantly changing New bank branches, co-
operatives, credit unions and savings society branches are regularly opened, whilst others are closed or merged.
- Many account numbers and bank codes require reformatting A significant number of account numbers and sort codes must be converted from the format in which they are issued to the payer into a required recognised format for processing.
- Customers are increasingly entering their own details The adoption of electronic commerce has led to a rapid increase in Internet and automated telephone systems to capture customer payment details, which significantly increases the chance of errors.
Bank account validation at the point of entry highlights erroneous data prior to processing, virtually eliminating the chance of submitting invalid payment data which can have a direct impact on the time and administration costs. Although many organisations have implemented bank account validation systems for checking the accuracy of payment data - usually developed in-house - these tend to rely on limited supplies of data and must be regularly updated.
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