Modern Treasury launches instant microdeposits

The system was introduced to facilitate immediate and continuous account verification for customers. Unlike the conventional approach of employing Automated Clearing House (ACH) microdeposits, which often necessitates waiting for several days for minimal deposits to reflect in a customer's bank account, the new process operates in real-time with the aim of reducing time constraints and functioning 24x7, including weekends. 

According to Modern Treasury, the conventional method has inherent drawbacks such as delayed access to funds or services and dependence on the ACH processing windows of the respective banks. This results in a suboptimal user experience, especially when account verification services are unavailable or underutilized by customers. 

With the integration of FedNow and RTP, the formerly time-consuming verification process becomes instantaneous, offering around-the-clock validation of bank account information. The advantages of adopting instant microdeposits extend to both business-to-consumer (B2C) and business-to-business (B2B) account verifications. 

Some of the main benefits for companies and customers include: 

• A better customer experience: customer onboarding is accelerated by eliminating the need for several days of waiting, offering swift access to products without the delay associated with traditional methods. 
• Reduced abandonment rates: the sign-up or checkout process is streamlined by capitalising on high customer intent and minimising drop-off rates. 
• Seamless supplier relationships: trust is fostered with suppliers by swiftly and efficiently verifying account details. 
• Improved cash flow: accounts payable and receivable processes are optimised with rapid verification, mitigating delays and enhancing overall cash flow. 

The mechanism behind instant microdeposits involves a combination of FedNow, RTP, and ACH. Payments are transmitted through FedNow or RTP, with automatic recovery via ACH debit. The system dynamically routes payments between FedNow and RTP based on the supported rail at the counterparty's bank. Modern Treasury automates the reconciliation of transactions upon completion.

Other noteworthy developments from Modern Treasury

In March 2023, Modern Treasury announced its support for Global ACH, which is a payment service that enables lower cost cross-border payments for customers. Modern Treasury launched support for Global ACH first with Silicon Valley Bank (SVB), a partnership that offered SVB clients more choices for cross-border payments beyond the SWIFT network. 

With Global ACH, customers could automate international payments using the ACH- and RTP-equivalent payment rails in other countries. This helped companies expand international capabilities with less upfront investment while driving efficiency into their global operations.