How API-based validation services help make payments faster

In today's fast-paced world, efficiency in payments is critical. Businesses and customers have come to expect fast, efficient and seamless transactions. One technology that’s helping to drive this change is API-based validation services. These services verify whether bank account details entered during a transaction match records held by financial institutions, ensuring transaction legitimacy.

Historically, transaction validation took several days to complete, causing delays in payment approvals. Today, thankfully, API-based validation services use near-real-time data exchange to help speed up the validation process. Here’s why they are crucial for sustainable business operations and how API-based Validation Services from J.P. Morgan Payments can help to scale your payments strategy.

How APIs modernize validation services

APIs are at the core of today’s payment platforms and make it possible for different systems - such as apps, financial institutions and businesses - to exchange information.

With API-based validation services, businesses can access account details (such as billing addresses, account numbers and routing information) across multiple data sources. By making requests directly to the service providers, APIs can provide timely verification of an individual or business account details and speed up the verification process.

For instance, when a business enters a vendor's payment detail into a payment form, the API can immediately query the service providers system to confirm if the account is valid, whether the billing address matches. This process takes place in milliseconds, compared to hours or even days for traditional verification methods, such as document-based verification. APIs often also support two-factor authentication (2FA), tokenization and other cryptographic methods to boost security and lower the risk that sensitive data is exposed during the validation process.

They can also handle high volumes of concurrent requests, often utilizing protocols like REST (representational state transfer) or SOAP (simple object access protocol) to allow for fast communication. REST APIs in particular are lightweight and can provide quick responses with minimal data transfer. They are also highly scalable and are capable of handling peak transaction periods without sacrificing performance.

The increased speed and efficiency of API-based validation services benefits both customers and businesses. An API often returns a response in just a few seconds, reducing the time between vendor payment approval, creating a smoother and more efficient user experience.

Benefits of faster payments enabled by API-based validation

Faster payments, enabled by API-based validation services, have far-reaching benefits for both customers and businesses. These include:

1. An improved customer experience

Customers today expect quick and almost seamless transactions. When customers don’t have to wait for days to verify their accounts, they are more likely to complete a purchase and return for future transactions. A smoother payment experience can translate into a loyal customer base, a huge advantage for any business.

2. Higher conversion rates

One of the primary reasons businesses struggle with low conversion rates is slow and complicated payment processes. When account validation takes too long, potential customers are more likely to abandon their purchase. Quick and easy payment validation reduces the friction in the purchasing process and makes customers more likely to complete their transactions.

3. Improved efficiency

API-based validation services can speed up fund settlement, helping ensure that payments are processed and cleared quickly. This then allows businesses to reinvest funds into operations or growth opportunities with little delay. Automated validation also reduces the need for manual intervention and can help cut administrative costs. Merchants can then handle more transactions without the additional strain on staff or resources.

4. Better security

While API-based validation services primarily focus on speed and efficiency, they can also enhance security by quickly identifying fraudulent transactions. Because of the increased speed, fraudulent transactions or inaccurate account details can often be identified and flagged quickly and businesses can take action fast to prevent financial loss or fraud. This helps improve the chance of catching illegitimate transactions and allowing legitimate transactions to proceed smoothly, which in turn lowers the risk of chargebacks or disputes.

Reducing the barriers to transaction completion creates a more efficient and rewarding purchasing process for the customer.

The impact of the Validation Services API from J.P. Morgan Payments

Our Validation Services API can help improve the speed and security of your payment systems. These services help merchants verify customer account details, reducing fraud risk and making transactions faster and more efficient.

Validation Services allows for flexible and low-code integration with other payments platforms as well as bulk customer validation via J.P. Morgan Access®. By using our API-based Validation Services, part of the Trust & Safety suite of solutions from J.P. Morgan Payments, businesses can also establish criteria for straight-through processing, improve data security and enable faster legitimate transactions.

Learn more about our Validation Services API and how to get started.