Nacha’s Phixius Picks ValidiFI to Strengthen Account Validation

ACH operator Nacha has teamed with ValidiFI to bolster bank account validation on its Phixius payments platform.

The collaboration, announced Sunday (April 27), is designed to expand the coverage of account validation data for Phixius users.

“Phixius provides the connective tissue to reach multiple account validation service providers, addressing gaps in coverage for validating U.S. bank account information,” Rob Unger, managing director of ACH network development at Nacha, said in a news release.

“With multiple data sources, Phixius assists organizations in mitigating payment fraud, helping reduce ACH returns, and improving the quality of ACH transactions.”

According to the release, the integration lets Phixus users validate bank account information in the U.S. instantaneously, while also mitigating payment risk when sending payments to and receiving payments from new accounts.

The release added that Phixius streamlines data validation by letting users access and connect with multiple data sources through a single, standard API gateway and  without centralized data aggregation, while also maintaining “strong data security practices” through SOC 2 Type 2 certification for security and confidentiality.

“This partnership with Phixius enhances the distribution of ValidiFI’s account validation solutions,” said John Gordon, CEO of ValidiFI. “Our offerings provide extensive coverage of bank accounts, combined with intelligence to identify fraud and assess risk.”

The announcement comes two days after Phixius formed a partnership with the JPMorgan Chase-owned Kinexys Liink to exchange information between their payment networks.

This arrangement will let customers of both firms “benefit by validation services using data provided by either network, helping to mitigate payment fraud and reduce potential ACH returns,” Unger said.

Meanwhile, PYMNTS spoke earlier this month with Eric Stratman, senior director of analytics and insights at ValidiFI, about the increasing levels of fraud witnessed by payments executives.

He said this is in part because many companies are dealing with outdated risk assessment processes. Thanks to these legacy systems, these businesses transact online and across ACH networks playing a losing game of catch-up with criminals.

“Fraudsters are constantly evolving” as they jump to different attack vectors that can depend on the “use case” of the customer and the payment being made, Stratman told PYMNTS.

When businesses “use standard validation methods to verify payments, they’re lagging,” he said. There’s no longer any way for a bank to just look at variables or data points to ensure that bank accounts are valid — one of the first lines of defense against scammers.