Why is it important to check bank account data?

A recent press release from Payments UK called for better understanding of the ownership of bank accounts, this focus is commendable. As Experian is a supplier of solutions that make the link between bank accounts and their owners, any industry move that helps us to improve and widen the scope of the accounts we can help our customers to check is good news.

So, why is it such a good idea to check that the bank account you are dealing with belongs to the person or business you wish to transact with?

There are many instances where companies need to take bank account information from people, typically bank account data is required to set up a direct debit or a credit transfer.

In many instances this information is being taken over the phone in a call-centre or increasingly by the customer entering the data into an online form. A simple enough process but there are good reasons why it’s in your and your customers’ interest to check bank account data before it is entered into your systems, let alone used to make or receive a payment.

1. Error Means Expense

When taking data by telephone or entering data into an online form, it’s very easy for an operator to mis-hear or mis-key or for a customer to mis-type. The sooner you identify error, the better for all concerned. If data is not checked until a payment is submitted it’s likely that the first time you realise something is wrong is when the payment fails. Industry experts estimate that each failed direct debit costs the originator up to £501. Cost comes not only from additional banking charges but is also incurred as you use valuable resource to contact customers for their correct data.

2. Preventing Fraud

Protecting your company and your customers from fraud can be helped by verifying the ownership of the bank account data you collect. Direct debit fraud, where someone sets up payment  from a bank account that does not belong to them, can be prevented by confirming that the bank account details you are given belong to your customer. Secondly you can protect against making payments to a fraudster who has taken over a customer’s account, supplying you with their bank account details instead of those of your genuine customer.  This is particularly important when you are paying money into a customer’s bank account in instances such as; insurance claims, pension payments, benefits, grants or account refunds.

3. Improving Customer Service

Payments that fail cause problems not only for your company but also for your customers. Customers may not receive the goods or services they ordered, receive late payment notifications or even worse fall victim to fraud as money they are owed is paid into a fraudster’s account. Even if the error is spotted before these things happen you will still have to re-contact your customer to get the correct information from them – trouble for you and for them. Checking bank account data in real-time at point of entry will prevent such incidents occurring, giving your customers a smooth, hassle free experience.

Incorporating bank account data checking into your processes will also enable you to offer your customers more flexible, less time consuming payment options. For example, in order to set up a Paperless Direct Debit, Bacs scheme rules mandate that bank account data isn’t only checked for validity, but that ownership of the bank account is verified. Checking bank account data online or via telephone means that you can realistically offer your customers the convenience of Paperless Direct Debit Scheme– they won’t have forms to fill in and return – less hassle for them and a great saving on postage costs for you!

Experian’s solutions for checking bank account data

We are able to help our customers to check bank account ownership of UK current accounts owned by both consumers and by businesses and other organisations.

1 http://www.bacs.co.uk/Bacs/Businesses/DirectDebit/UsingDirectDebit/Pages/UsingDirectDebit.aspx