Decentro has launched its penniless Bank Account Verification (BAV) API. It aims to help enterprises save over five to 10 man hours and close to Rs 50-75 per onboarding of every new consumer or merchant.
The first method of penniless BAV, in contrast to the penny drop BAV process, is a method that allows an enterprise to obtain the name of a bank account holder or the status of the account using only the bank account number without requiring any nominal financial transaction.
While penny-drop BAV brought in significant efficiency and security gains compared to manual verification, it still leads to failures in many cases, such as a wrong IFSC code entered or if the bank has merged with another bank.
This is because penny drop verification involves an actual Re 1 (or penny) being sent from the source account to the destination for verification, and any issue during this entire flow leads to a failure. Moreover, for companies handling recurring payments and large-scale transactions, penny-drop verification increases the risk of sending funds to a fraudulent account unnecessarily.
The second product, called Reverse Penny Drop or Penny Pull Verification, asks the user to make a Re 1 payment (via UPI) instead of asking for the full account details and then depositing the Re 1 (penny) as per the old methods. For a user, it is just like making a regular UPI payment online, and he/she does not need to remember any of his long bank account details at any time. Once he makes a successful payment of Re 1 via UPI, the aggregator/financial entity can then receive his verified bank account details as well as the actual registered name from the banking ecosystem in the API response itself.
Speaking in this regard, Rohit Taneja, Founder and CEO, Decentro, said, “Since our inception in 2020, we have been driven by a singular goal of building a robust financial infrastructure for Indian fintechs and enterprises so that they can focus on innovation without having to spend their time sorting out the infrastructure. This has empowered us to find solutions and build products across the payments and banking value chain, giving us a significant advantage in having the most robust and safest data and financial flow ecosystem. This has helped us gain an airtight reputation in becoming one of the first banking infrastructure companies to launch a penniless verification module, which has a large potential to reduce costs for enterprises and make their financial flows safer.”
