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Bank verification
Also called bank login, instant verification, Plaid connection, read-only access.
Confirming account ownership and transaction history through a direct data connection or a bank-issued report rather than uploaded statement PDFs.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Instead of collecting documents, the funder asks you to link the account through an aggregator, or authorizes a bank-report service to pull verified data. The connection returns account ownership, balances, transaction history and often a categorized cash flow view directly from the institution.
Funders prefer it for the same reason they prefer bank statements over tax returns: the data has not been through your hands. It also confirms the account being verified is the account that will be debited, which is a fraud control as much as an underwriting step.
Aggregator connections are normally read-only and token-based rather than a stored password, but the credential is entered on a screen the funder or aggregator controls, and merchants are entering online banking credentials at the request of a party they met yesterday. Check the aggregator is a recognized provider, that the request comes from the funder rather than a broker, and that the connection is described as read-only.
Some agreements require the connection to stay live for the duration of the facility, for monitoring and reconciliation. Others require it only at underwriting.
Where this one catches people
Read the contract for what a revoked connection means. Where continuing access is a condition, disconnecting the aggregator or changing banking credentials can be an event of default in its own right, on the same footing as blocking the debits. Merchants who unlink the account after funding, reasonably enough, sometimes trigger a default they did not know existed.
Where you will meet this term
Read next
Bank verification — common questions
What does bank verification mean?
Confirming account ownership and transaction history through a direct data connection or a bank-issued report rather than uploaded statement PDFs.
Where does bank verification catch people out?
Read the contract for what a revoked connection means. Where continuing access is a condition, disconnecting the aggregator or changing banking credentials can be an event of default in its own right, on the same footing as blocking the debits. Merchants who unlink the account after funding, reasonably enough, sometimes trigger a default they did not know existed.
Is bank verification the same as an interest rate?
Bank verification is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does bank verification apply to?
Merchant Cash Advance, Working Capital, Business Line of Credit, Revenue-Based Financing.
Is there a worked example of bank verification?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside bank verification?
ACH debit, Automated underwriting, Bank statement underwriting, Default, Reconciliation.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.