Explaining ACH bank verification with Dwolla

Businesses using ACH-based transactions for facilitating payments payments will need to connect and verify users’ bank accounts with your platform or application.

Bank verification is done for a variety of reasons and is required if you’re collecting funds from your Customer’s bank accounts. Verification is done to ensure the user attaching the bank account actually owns the account. Leveraging the Dwolla Platform allows you to quickly — and securely — send or receive payments from a customer verified bank account.

At Dwolla, we offer three ways to verify bank accounts for ACH transfers within your branded user-interface. Whether it’s receiving or sending ACH transfers, Dwolla’s solution is a cost-effective way to transfer funds.

We will walk through each bank verification option below:

  1. Microdeposits
  2. Instant Account Verification via Dwolla.js
  3. Third party verification


Microdeposits are deposits of less than ten cents that verify ownership of a specific bank account.

When using the microdeposit method for bank account verification, the user will input their routing and account number. The API customer will then initiate microdeposits which will cause two small credits to go to the Customer’s bank.

The small amounts that Dwolla deposits into the identified funding source can be found in the Customer’s bank statement in one to three business days and are used to confirm the account belongs to the user. Validate microdeposits via the API or the Dwolla Dashboard.

Instant account verification (IAV)

Utilizing Dwolla’s powerful Dwolla.js client side javascript library, applications can quickly and securely verify a Customer’s bank using only a few lines of code. Dwolla.js allows businesses to integrate instant account verification. With the Instant Account Verification option, a user is prompted to select their banking institution and enter their online banking credentials to verify the account.

For example, Relay Delivery — a fast growing management and fulfillment platform in the restaurant delivery space-–leverages Dwolla’s API for ACH transfers to replace an outdated and manual payment process that had created productivity black hole with client onboarding and scalability issues.

With only one developer available, Relay Delivery integrated with Dwolla’s API for ACH transfers in two weeks and reduced payment processing costs by an estimated $1,200 a month.

“From collecting bank details for every person, to manually disbursing paychecks weekly, it was clear that with our rapid growth that it could not be sustained,” said Zach Ivester, Relay Delivery Integrations Architect. “In implementing Dwolla, we’ve fully automated the sign up and disbursement phases — we’ve freed ourselves to focus on what’s important, our business.”

A third option exists, combining instant account verification with an optional microdeposits flow. While instant account verification will accommodate a vast majority of the U.S banking population, if a bank does not offer online banking — or the user can’t remember their credentials — this option provides a self-contained bank verification process.

Third Party Verification

Dwolla offers a third party options for bank verification, with only minor differences from the first two options already listed.

For instance, partnering with Plaid allows customers to quickly and securely verify bank account ownership, without sharing sensitive financial data, like account and routing numbers. Using Plaid, customers authenticate information with their financial institutions through Plaid while behind the scenes, a unique token is used to create a funding source via the Dwolla API.