Experian and JPMorgan Push Account Checks Into Payment Workflows

Faster payments leave businesses with less time to discover whether the account at the other end belongs to the wrong person, contains bad information or may be connected to fraud.

That pressure is moving verification closer to the point where money leaves the sender. A series of August launches is putting account and payee checks into payment APIs, enterprise resource planning and treasury connections and industry-specific payment platforms, allowing businesses to verify recipients inside the systems already being used to prepare and approve payments.

Experian and International Payments Identity (iPiD) announced Thursday (Aug. 27) a partnership extending account ownership verification beyond the United Kingdom into Single Euro Payments Area (SEPA) markets and regions including the Americas, Africa, Asia and the Middle East. The combined service will provide U.K. businesses with a single solution for verifying accounts across domestic and international markets.

That followed an Aug. 26 move by Open Payments, which integrated Verification of Payee directly into its API through a partnership with Movitz Payments. Payments originating in ERP systems, accounting platforms, treasury systems and other business applications can check whether the intended recipient matches the account holder before execution.

The announcements extend a pattern developing across payment infrastructure. Verification is becoming something the payment system itself can call before releasing the money.

The PYMNTS Intelligence report “Payment Protection: Why Firms Still Aren’t Real-Time Ready” found in August that 65% of firms plan to adopt or expand identity verification and know your customer automation during the next 12 months. That compares with 59% planning to adopt or expand secure bank connectivity or open banking and 59% planning additional artificial intelligence-based fraud detection.

Verification Moves Closer to the Send

Other launches this month show how the investment is moving into different parts of the payment workflow.

MassPay launched MassPay Validate, a standalone service that checks an account’s status and owner before a payment is originated. Companies can access it through one API without routing their payout volume through MassPay, allowing verification to sit alongside an existing bank or payment processor.

Commercial insurance is producing another version of the model. FinTech Diesta said Aug. 5 that it integrated Kinexys by JPMorgan’s Kinexys Liink Confirm application into its payment platform. Brokers, managing general agents and insurers can verify beneficiary account details within the insurance payment workflow before initiating payments. Before the announcement, the system was already being used to cross-reference several thousand payee accounts for a global enterprise broker across multiple countries, currencies and account formats.

Putting verification at that point can address more than outright fraud. Bad account information, outdated payee records and ownership mismatches can also generate failed payments and manual repair work.

The PYMNTS Intelligence report “Early Detection: Why Top-Performing Firms Focus on Fraud Before It Starts” showed how frequently problems are discovered after the opportunity to stop the payment has passed. Of the 60 middle-market heads of payments surveyed, 57% said their companies typically detect fraud or nonclearance after settlement. Just 17% typically detect problems before a transaction is initiated and 13% during authorization. Firms detecting problems earlier were heavier users of instant bank account verification and open banking-based ownership verification.

The “Payment Protection” report, meanwhile, found that 60% of firms verifying account ownership in real time detected suspected fraud instantly or within minutes, compared with 39% of companies that didn’t verify ownership in real time.

Real-time verifiers were also more than twice as likely to detect suspected fraud before money moved, at 21% versus 10%. The research showed an association rather than establishing that verification alone causes earlier fraud detection.

The August launches put these findings into an infrastructure context. ERP systems, treasury platforms and vertical software are becoming payment initiation points, and verification is being embedded alongside that capability. The objective is to establish whether the account and intended payee line up while the payment can still be stopped, corrected or reviewed.