microdeposit

A microdeposit is a very small amount of money, typically less than one dollar, that is sent electronically from one bank account to another. These deposits are often used for account verification purposes. Financial institutions, especially those offering online services, utilize microdeposits to confirm that a user's bank account details are accurate and active before linking them to a new service or platform.

The process usually involves the service provider sending two separate microdeposits to the user's specified bank account. These deposits will appear on the user's bank statement, often with a specific reference code. The user then needs to log into their online banking or check their statement to find the exact amounts of these two deposits. After identifying the amounts, the user returns to the service provider's platform and enters the confirmed deposit figures. Once the amounts match what the provider sent, the account is considered verified.

Microdeposits are a common and secure method for establishing the validity of a bank account without requiring the user to share more sensitive information like their full account number or routing number directly with the service. They are also used in some peer-to-peer payment systems and for setting up recurring payments. The small amounts ensure that any potential errors are quickly identified and the cost of sending them is minimal for the financial institutions involved.