Penny Drop Verification

The challenges with bank account verification are: There are plenty of downtimes for which there are high customer drop-offs. Due to this customers don't receive OTP and complete the user onboarding journey. There are also no fallback options in place to restore customer journeys in case of drop-offs. Even when the service is working, users need to have Aadhaar card handy and perform multiple steps to complete the journey.

Penny drop verification is a method used in the financial industry to confirm the validity of a bank account. It involves a simple yet effective process where a nominal amount, often one cent/rupee (hence the term "penny drop"), is deposited into the provided bank account. After the deposit is made, the account holder verifies the exact amount received, typically through an online banking portal or by contacting the bank. This verification process serves as a security measure to authenticate the ownership and legitimacy of the bank account. It confirms that the individual providing the account details has access and control over the account. Penny drop verification is commonly utilized by businesses, financial institutions, and payment service providers during account setup, onboarding, or verification procedures. The term "penny drop" refers to the realization or confirmation of the exact amount deposited, ensuring accuracy in the verification process. Implementing penny drop verification helps prevent fraudulent activities, ensures account ownership validation, and adds an additional layer of security to financial transactions and account management processes.

Bank account verification is critical for user onboarding, ensuring security, regulatory compliance, accurate transactions, user trust, and reduced operational risks. It confirms identities, prevents fraud, and fosters a secure environment for financial services.