Real Questions. Real Payments. Real Answers.

Payroll, Lending & Compliance—What Businesses Ask Us Most

In industries where payments, payouts, or collections drive revenue, businesses face the same risks: failed transactions, fraud exposure, and operational rework caused by inaccurate or incomplete bank information.

The questions we hear are consistent:
How do we avoid failed payments? How do we reduce fraud risk? How do we stay ahead of compliance requirements without slowing everything down?

Why This Matters Right Now

Payroll and lending teams are under more pressure than ever to get payments right the first time.

Nearly 8 in 10 U.S. organizations experienced attempted or actual payment fraud in 2024, according to the latest Association for Financial Professionals (AFP) Payments Fraud and Control Survey.

That reality is now driving a broader shift in how the ACH network approaches oversight and prevention. Through its phased rollout of new risk management and fraud monitoring requirements, Nacha is raising the bar for proactive controls, real-time visibility, and authorization discipline—making delayed action an increasingly material risk.

Against that backdrop, here are some of the most common questions we hear—and how our data helps clarify what works in practice.

❓ What kind of bank account verification do payroll providers and professional employer organizations (PEOs) typically need?

The most common indicators include:

• • Account validity (does the account exist and accept payments?)
  • ACH eligibility (is the account enabled and permitted for ACH transactions?)
  • Account standing signals (is the account safe to send money?)
  • Non‑sufficient funds (NSF) history, where available and appropriate

What the data shows*:
Our customers see up to a 75% increase in payouts eligible for automatic approval when they validate bank accounts upfront—reducing manual exceptions, rework, and downstream friction. Stronger validation also consistently delivers clearer results by moving accounts out of “no‑hit” or indeterminate states.

These checks help payroll providers and PEOs reduce failed payroll runs, avoid exception handling, and prevent costly payment reprocessing without adding friction for employees.

❓Can bank account validation support KYC and compliance efforts?

✅ Yes.

Bank account validation plays a critical role in strengthening compliance programs by confirming banking relationships before funds move. That upfront verification supports:

• • Know Your Customer (KYC) efforts by validating banking relationships tied to the customer or entity
  • Fraud detection by flagging mismatches, inactive accounts, or high-risk conditions before transactions are initiated
  • Risk management controls by reducing reliance on post-payment exceptions, returns, and disputes

What the data shows*:
Accounts with a prior NSF (R01) return are 36% more likely to experience another NSF return on the next transaction. Identifying these signals before funds move reduces avoidable returns, strengthens authorization confidence, and shifts compliance controls upstream—where they are most effective.

In compliance-heavy application environments, increased account coverage typically enables teams to move validation earlier in the workflow, reducing downstream reviews and improving confidence before payments are initiated.

Rather than waiting for a problem to surface after a payment fails or is disputed, organizations can use account validation as a preventive control within their compliance framework.

❓Does [proactive bank account validation] help with current and upcoming Nacha requirements?

✅ Yes.

Under this year’s updates to Nacha’s fraud monitoring and risk management framework, organizations are being encouraged to move away from reactive processes toward proactive validation and monitoring—particularly for ACH credits and business payments.

What the data shows*:
Payments involving mismatched identity or ownership signals show materially higher failure risk. When a phone number or first name did not align with the account holder, payment failures increased by 4.5x to 5.5x. Additionally, consumers with a prior ACH return showed a 37% increase in first‑payment default (FPD) risk—underscoring why post‑return remediation alone is no longer sufficient.

In practice, moving these checks upstream has helped organizations reduce exception-driven remediation and demonstrate stronger authorization discipline—aligning controls with Nacha’s evolving expectations.

Validating bank accounts upfront helps organizations:

• • Improve authorization integrity by confirming alignment with the intended payer or payee
  • Reduce fraud and misdirection risk tied to identity mismatches or manipulated payment details
  • Support payment accuracy expectations embedded in Nacha’s evolving risk-based monitoring guidance

In short, upfront account validation establishes the preventive controls Nacha now expects—addressing payment risk before issues arise, not after.

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*Findings represented are based on ValidiFI internal payment risk analysis.