Micro-deposits: how small deposits verify a bank account

What are micro-deposits?

Micro-deposits are one or two very small payments sent into a bank account to verify it. The customer looks at their bank statement and confirms what arrived. Only someone who can see the account can answer, so a correct answer shows both that the account is open and that the customer has access to it.

Nacha's rules call these Micro-Entries. Since September 16, 2022, a Micro-Entry is "a credit or debit Entry used by an Originator for the purpose of verifying a Receiver's account or an individual's access to an account."

What do Nacha's rules require?

Nacha's Micro-Entries rule came in two phases. Phase 1 took effect on September 16, 2022, and Phase 2 on March 17, 2023.

• Amount. Each credit Micro-Entry must be less than $1.00.
• Offsets. A sender may pull the money back with debits. The debits can't total more than the credits, so the account never ends with a net debit.
• Timing. Credits and any offsetting debits must be sent together and settle at the same time.
• Description. The Company Entry Description must be "ACCTVERIFY".
• Company name. It must be easy for the customer to recognize and the same as, or similar to, the name on later payments.
• Next payment. A live payment can follow as soon as the verification is complete, but not in the same batch as the Micro-Entries.
• Fraud checks. Senders must use commercially reasonable fraud detection, including monitoring how many Micro-Entries they send and how many come back.

Why verify an account at all?

Nacha's WEB debit rule, effective March 19, 2021, requires originators to validate first-use consumer account details for debits authorized or started online. Micro-entries are one of the methods Nacha lists, along with a prenote and commercial validation services.

The difference from a prenote is who has to act. With a prenote, silence from the bank by the end of the return period means the account checks out. With Micro-Entries, Nacha says "no news is good news" doesn't apply. The customer has to confirm the details before the originator can treat the account as verified.

How do micro-deposits work on Stripe?

Stripe tries instant verification first, by having the customer log in to their bank through Financial Connections. If the customer enters account numbers by hand instead, Stripe verifies with micro-deposits:

1. Stripe sends small deposits to the account. Its docs describe either two amounts or a single deposit carrying a six-character code that starts with "SM".
2. The deposits take 1 to 2 business days to appear on the customer's online statement.
3. The customer gets an email with a link to enter the amounts or the code.
4. Once verified, the payment starts processing.

What makes micro-deposit verification fail?

On Stripe, verification fails if:

• the deposits can't be sent, which usually means a closed or unavailable account or a wrong account number
• the customer makes 10 failed attempts, after which the account can't be verified or reused
• the customer doesn't verify within 10 days

If the customer doesn't verify in time, Stripe says the payment reverts to needing new payment details. You need to contact the customer for another way to pay.