"Funding Source" as a concept


One thing I haven’t been able to suss out from the API is the language of “Funding Source”, does the funding source only refer to the ability for that account to send money, or is it bidirectional, in the sense that setting up the funding source would allow access for a business verified account to both send and receive money when they set it up. The API docs don’t really describe what it does specifically enough for me.

The reason I’m asking is because I’m trying to specifically send money to registered businesses (specifically nonprofits) from our account in an ACH format and verify their accounts. It’s been a bit difficult to try to piece together who can do the following:

  1. Verify the account for KYC, so we’re sending to the correct individuals that we intend to using Dwolla’s API.
  2. Verify that the account is correctly attached to the EIN of the Business we’re trying to send to, and let us know if they do not match so we can send them money that they have accrued.

A traditional login/verify deposit pathway doesn’t quite work because it’s possible that someone could play third party and redirect the money illicitly into a personal account, which is why we need to validate the EIN directly with the bank account. I’m just trying to hypothetically go over the possibility that someone with knowledge of who to validate can validate themselves, but put in a bank account to receive ACH without being the same one as the EIN of the business as the base check here.

Is that what happens in the process of customer & funding source validation?

Hi Dan - thanks for posting!

A funding-source is the term we use to refer to a resource in the API that is capable of transferring funds, be it unidirectional or bidirectional. For example, a bank funding-source which is in a verified state is capable of both receiving and sending funds, whereas a debit card funding-source is only capable of receiving funds.

Now let’s talk about verification of a Customer account vs a funding-source.

Customer Verification:

In order for a Customer to go through KYC/CIP verification in Dwolla, they would have to be created as Verified Customer types. Here are some additional information related to Customers and verification -

Funding-source verification:

The verification of a bank funding-source in Dwolla checks is it is a legitimate US bank account.
Check out this blog post that goes over the different bank verification methods available at Dwolla - https://www.dwolla.com/updates/ach-bank-verification/

However, I’m afraid we don’t have any visibility into the bank account to determine if it belongs to the user signing up. There isn’t a way using Dwolla’s API to check that the bank account is associated with the EIN of the business that is signing up. For this use case, I would recommend verifying a user’s bank account using a third party bank verification provider like Plaid who we have a tokenized integration with that allows you to attach banks, that users select with Plaid, to their Dwolla Customer accounts as verified funding-sources.

Hope that helps! Please let me know if you have any questions!

It does!

I also happened to have a chat with @spencer and Sean L. today to help clarify some things.

Thanks for the response!

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Sweet! They’re the best! :slight_smile: