Wednesday, October 21, 2015

Different Ways to Connect Bank Accounts to Payment Apps & What they Mean

In a post a few weeks ago we discussed "Using Online Apps to Collect Payments Faster While Protecting your Privacy and Identity".  An important part of using online banking apps that we did not discuss is connecting a bank account to these third-party apps.  Connecting a bank account to a third-party app can be overwhelming at first and is something not everyone is comfortable doing.  However, there are different ways to connect accounts and understanding these ways can help with making the right decision for any situation.  Some commonly used applications that might require a bank account to be connected are:
  • Paypal
  • Square
  • Venmo
  • Apple Pay
  • Google Wallet
  • Intuit GoPayment
  • Facebook Messenger
Each app is created and supported by different companies which means they have different interfaces, pricing structures, and integrate different features.  Even so, there are two commonly used methods for connecting bank accounts to third-party apps.  Each method has certain benefits and items that should be considered before proceeding.  The two main methods are:
  1. Providing bank account login credentials including username and password
  2. Providing bank account and routing information and verifying with micro deposits

Providing Bank Credentials
When using this method simply enter in the appropriate bank username and password in the third party application in the add bank account section.  The app in turn sends this information to the bank directly to verify the credentials are in fact legitimate.  If the credentials pass, the bank account is considered verified by the third-party and is connected.

This method requires:
  • Providing bank credentials including username and password

Using bank account credentials is quick and can verify an account instantly but is not supported by all banking institutions.  Also, providing banking credentials to a third party app is not something everyone is comfortable doing.  If you are concerned about the security of your banking credentials, or other aspects of this method, contact the company, read their FAQ, or use the micro deposit method.


Providing Bank Information for Micro Deposits
When using this method, enter the bank account and routing information into the add bank account section of the third-party app.  With this information, the app will make two micro deposits into the bank account.  Micro deposits are small deposits under $1 used mainly for account verification purposes.  Once both micro deposits appear in the bank account, open the third-party app to input the deposit amounts.  If the amounts entered into the app match the deposit amounts, the bank account is considered verified and is connected.

This method requires:
  • Providing a bank account and routing number


  • Accessing the bank account to determine micro deposit amounts


  • Verifying micro deposit accounts within the third-party app
Using the micro deposits method can take a few days, depending upon how long the bank takes to process the deposits.  The exact amounts of the micro deposits are required to finish the verification process with this method.  Also, it is important to remember to finish the process because unlike using bank credentials, the verification process is not instant.  While this method takes longer, it is supported by almost every bank and does not require giving bank credentials to a third party app.

Whatever reason for using applications that require connections to banking institutions, consider the options before connecting an account.  Using bank credentials is instant, but not supported by all banking institutions.  Using micro deposits requires less private information but takes longer.  Choosing the method that best fits your needs will help ensure a seamless experience between banking institutions and third party apps.

As always, being informed when it comes to new technologies and digital privacy is important.  Good luck!

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