In today’s digital economy, account verification has never mattered more. Payments move faster than ever, but speed is nothing without security. Behind every transaction, two critical checks keep fraud at bay: can you trust the person making the transaction, and do they actually control the account they’re using?
While identity verification often gets the spotlight, account verification ensures the money moves safely to the right place. Whether linking a bank account, adding a card, or sending a payout, confirming ownership of a payment method is essential for reducing fraud, preventing errors, and protecting customer funds.
In this article, we’ll cover what account verification is, its relation to identity verification, and how open banking is changing the verification game.
Topics we’ll discuss include:
- What is account verification?
- What is identity verification?
- Step by step: How identity verification and account verification work together in the payment journey
- Identity verification, account verification, and open banking
What is account verification?
Account verification confirms that a payment method – whether a bank account for Pay by Bank, card, or digital wallet – is valid and controlled by the person claiming to own it. It’s a frontline defence against fraud, transaction errors, and unauthorised account use.
Common methods:
- Micro-deposit confirmation
- Real-time account information verification via APIs
- Card verification (authorisation holds, 3DS checks)
Account verification typically happens when a user links a new payment method to a platform, before issuing payouts, and ahead of high-value transactions. It ensures the right funds reach the right destination and reduces operational risk for businesses.
What is identity verification?
Identity verification is the process of confirming that a person is who they claim to be before allowing access to financial services or processing high-risk transactions. It works hand in hand with account verification to build a secure payment environment.
Common methods:
- Government-issued ID checks (passports, driving licences, national IDs)
- Biometric verification (facial recognition, fingerprint scanning)
- Database and watchlist checks (e.g. PEP and sanctions lists)
- Strong Customer Authentication (SCA) (multi-factor authentication for online payments in line with PSD2 and the upcoming PSD3, requiring two or more of: something the customer knows, has, or is)
Identity verification typically takes place during account onboarding (KYC checks) and in high-risk or high-value situations, helping prevent identity theft, fraud, and financial crime.
One example is Auctionet, who, as one of Europe’s most trusted online marketplaces, must be able to run KYC checks quickly on high-value transactions. Faced with the challenge of onboarding each new auction house individually, Auctionet has turned to Brite Payments to speed up the process.
Albert Ramsted, CTO at Auctionet, explains:
“Fortunately, our cooperation with Brite in this regard has been excellent. We even changed our credit card provider because the KYC (Know Your Customer) and client checks were taking too long, delaying onboarding for card payments.”
Step by step: How identity verification and account verification work together in the payment journey
Identity verification and account verification are both integral parts of the typical digital payment onboarding process. In six steps, here’s what this looks like:
1. User registration
The user signs up via the website or mobile app, providing basic personal details such as:
- Name
- Phone number
- Date of birth
- Address
2. Identity verification (KYC check)
This step ensures the person signing up is who they claim to be. Common verification methods include:
- Uploading a government-issued ID (passport, driver’s license, national ID)
- Taking a live selfie for facial recognition (to match against ID)
- Cross-checking personal information against public or proprietary databases
- SCA, involving two or more of the following:
- Something the customer knows (a password or PIN)
- Something the customer has (a phone, a token, or a secure app, such as Sweden’s Bank ID)
- Something the customer is (biometric verification, like fingerprint or facial recognition)
If the customer’s identity is confirmed, the process moves on to the next step. If identification is unsuccessful, the user is asked to retry or submit alternative documentation.
3. Payment method linking
The user chooses how they’d like to fund or receive payments:
- Adding a debit/credit card
- Linking a bank account
- Adding an open banking service
- Connecting a digital wallet
4. Account verification (payment method ownership confirmation)
For bank accounts:
The traditional method: Small micro-deposits are sent to the user’s account with a unique reference code. The user inputs the code to confirm ownership.
Open banking/instant verification: The user logs into their bank via a secure API (with consent). The platform retrieves the verified account holder’s name, account number, and sort code/IBAN instantly.
For cards:
- A small authorisation hold or verification charge (like £0.01) is applied to the card.
- The user confirms the amount or receives an OTP (one-time passcode) via 3D Secure (3DS) authentication.
The account or card is then confirmed as belonging to the verified user. Failed verifications may require retrying or choosing a different payment method.
5. User consent
The user consents to the terms and conditions, privacy policy, and – if open banking is used – specific permissions for data access.
6. Activation and transaction access
Finally, the user account is activated. The verified payment method is added to their profile, enabling them to make or receive payments subject to transaction limits or regulatory thresholds.
Identity verification, account verification, and open banking
Open banking isn’t just about easier payments – it’s also transforming how businesses verify users and accounts.
With open banking, consumers can securely share their bank account information with third-party providers via regulated APIs, giving them greater control over their financial data.
When it comes to account verification, open banking:
- Eliminates the need for slow micro-deposits
- Provides real-time confirmation of account ownership
- Reduces fraud by confirming the user controls the bank account being linked
- Cuts failed transactions and payout errors
As for identity verification, open banking:
- Cross-references bank-verified personal details (name, address) with onboarding information
- Helps confirm the legitimacy of high-value or high-risk transactions
In short, open banking enables faster, safer onboarding – but it’s in account verification where the real operational and security gains are being made.
Want to learn more about the benefits of open banking and payments?
At the heart of Brite Payments is how it combines complex data solutions with payments, making processes such as onboarding or account creation at the same time as payment, easy. If you would like to learn more about the different products and services Brite offers, get in touch with our payment experts today.
