An External Bank Account is a bank account outside of Lithic that your program can send funds to to or receive funds from via ACH. To set-up an External Bank Account, you will provide information about the bank account and its owner. Most programs will verify ownership of that bank account via micro deposits, while some will have the ability to verify the bank accounts information via prenotifications (also known as prenotes) or via their own external verification method. Once the external bank account has been verified, your program can then collect from and send funds to this account using ACH originations initiated via Lithic's Payments API.

Verification Methods

Lithic currently offers three methods to verify ownership of an external bank account: MICRO_DEPOSIT, PRENOTE, or EXTERNALLY_VERIFIED.

1. MICRO_DEPOSIT verifies a bank account using 2 small dollar deposits and 1 small dollar withdrawal via ACH. This method works on all bank accounts but generally takes 1-2 business days to complete.
2. PRENOTE verifies a bank account using a zero-dollar transaction via ACH. Prenotes validate the information of the bank account but do not verify ownership.
3. EXTERNALLY_VERIFIED requires the program to verify the external bank via their own processes. This is enabled on a program-by-program basis, and must be explicitly enabled.

Depending on the use case (e.g., in cases where the program cannot or does not need to verify ownership), the ability to use PRENOTE to validate bank account information may be made available. Prenotes validate the information of the bank account but does not verify ownership.

Micro deposit verification

Micro deposit verification consists of three steps:

1. Your user provides information on the external bank account's owner and the bank account type and routing and account number. Program passes this information to Lithic with a POST request to /external_bank_accounts with the verification_method set to MICRO_DEPOSIT. The external bank account enters a verification_state of PENDING.

2. Lithic sends two small dollar deposits (totaling less than $2) to the external bank account and then immediately collects the sum of both amounts. Both the deposits and the collection can be seen in the external bank account in 1-2 business days.

3. Your user provides the two deposit amounts they see in their bank account, and the program passes this information to Lithic with a POST request to external_bank_accounts/{external_bank_account_token}/micro_deposits. If the amounts match, the external bank account will be verified and entered into a verification_state of ENABLED.

If the incorrect micro deposit amounts are provided more than 5 times, then the external bank account will switch to a state of FAILED_VERIFICATION and can no longer be verified programmatically. You must provide additional documentation establishing account ownership (e.g., bank statement) to Lithic, and our operations team will manually verify and enable the bank account.

Prenote verification

Prenote verification consists of three steps:

1. Your user provides information on the external bank account's routing and account number. Program passes this information to Lithic with a POST request to /external_bank_accounts with the verification_method set to PRENOTE, and the token of the operating account from which the prenote will originate. The external bank account enters a verification_state of PENDING.
2. Lithic automatically generates a prenote (i.e., a $0 credit) and sends it to the external bank account.
3. Lithic lets two banking days pass after the settlement date of the prenote. If by the start of the third banking day no return is received, then that bank account is considered verified and enters into a verification_state of ENABLED.

If a return is generated by the external bank account’s financial institution, then the bank account information is considered invalid, and the external bank account will switch to a state of FAILED_VERIFICATION and can no longer be verified programatically. You should confirm the bank account details with the end-user and go through the external bank account creation process again.

Externally Verified verification

Externally verified verification consists of three steps:

1. The program must first verify the external bank account information on their side.
2. Once confirmed, provide the information of the external bank account's routing and account number to Lithic with a POST request to /external_bank_accounts with the verification_method set to EXTERNALLY_VERIFIED. The external bank account will be created with a verification_state of ENABLED.

External Bank Account Lifecycle

An External Bank Account has two lifecycles that are tracked by verification_state and state. The former indicates whether an external bank account has been verified by you and is generally finalized during initial set-up. The latter tracks the actual state of the external bank account throughout the lifetime of the account.

For example, an External Bank Account that has a verification_state of ENABLED and state of ENABLED indicates the account has been verified and can process ACH transactions. If the user decides to close their external bank account at their bank, the External Bank Account state will change to CLOSED, but its verification_state will remain ENABLED.

External Bank Account Schema

{
  "token": String,
  "type": String,
  "verification_method": String,
  "owner_type": String,
  "owner": String,
  "state": String,
  "verification_state": String,
  "routing_number": String,
  "last_four": String,
  "name": String,
  "currency": String,
  "country": String,
  "account_token": String,
  "created": String,
  "company_id": String,
  "dob": Date,
  "doing_business_as": String,
  "address": Address,
  "user_defined_id": String,
  "verification_attempts": Integer,
  "verification_failed_reason": String	
}

Address Schema

Create external bank account

POST https://api.lithic.com/v1/external_bank_accounts

Sample Request: Micro Deposit Verification

curl https://api.lithic.com/v1/external_bank_accounts \
	-X POST \
  -H "Authorization: YOUR_API_KEY" \
  -H "Content-Type: application/json" \
	-d '
{
  "verification_method": "MICRO_DEPOSIT",
  "financial_account_token": "f2f74f63-d4b3-4f51-b40e-7156b45a1e56",
  "owner_type": "BUSINESS",
  "owner": "John Doe LLC",
  "type": "CHECKING",
  "routing_number": "021000021",
  "account_number": "123456789",
  "name": "Funding Account",
  "country": "USA",
  "currency": "USD",
  "address": {
    "address1": "456 Main Street",
    "city": "New York",
    "state": "NY",
    "postal_code": "10128",
    "country": "USA"
  }
}
'

Address Schema in Requests

Sample Response

{
  "token": "2da0a808-de12-4b42-b413-ca736d6892c5",
  "type": "CHECKING",
  "verification_method": "MICRO_DEPOSIT",
  "owner_type": "BUSINESS",
  "owner": "John Doe LLC",
  "state": "ENABLED",
  "verification_state": "PENDING",
  "routing_number": "021000021",
  "last_four": "6789",
  "name": "Funding Account",
  "country": "USA",
  "currency": "USD",
  "account_token": "4998a704-636f-4d79-97da-478ea19b152a",
  "created": "2020-07-15T19:17:22Z",
  "company_id": "0924752",
  "user_defined_id": "ABC",
  "verification_attempts": 1,
  "verification_failed_reason": "", 
  "address": {
    "address1": "456 Main Street",
    "city": "New York",
    "state": "NY",
    "postal_code": "10128",
    "country": "USA"
  }
}

List external bank accounts

GET https://api.lithic.com/v1/external_bank_accounts

Sample Request

curl https://api.lithic.com/v1/external_bank_accounts \
  -H 'AUTHORIZATION: YOUR_API_KEY'

Sample Response

{
  "data": [
    "token": "2da0a808-de12-4b42-b413-ca736d6892c5",
    "type": "CHECKING",
    "verification_method": "MICRO_DEPOSIT",
    "owner_type": "BUSINESS",
    "owner": "John Doe LLC",
    "state": "ENABLED",
    "verification_state": "PENDING",
    "routing_number": "021000021",
    "last_four": "6789",
    "name": "Funding Account",
    "country": "USA",
    "currency": "USD",
    "account_token": "4998a704-636f-4d79-97da-478ea19b152a",
    "created": "2020-07-15T19:17:22Z",
    "company_id": "0924752",
    "user_defined_id": "ABC",
    "verification_attempts": 1,
    "verification_failed_reason": "", 
    "address": {
      "address1": "456 Main Street",
      "city": "New York",
      "state": "NY",
      "postal_code": "10128",
      "country": "USA"
  	}
  ],
  "has_more": false
}

Get external bank account

GET https://api.lithic.com/v1/external_bank_accounts/{external_bank_account_token}

Sample Request

curl https://api.lithic.com/v1/external_bank_accounts/2da0a808-de12-4b42-b413-ca736d6892c5 \
  -H 'AUTHORIZATION: YOUR_API_KEY'

Sample Response

{
  "token": "2da0a808-de12-4b42-b413-ca736d6892c5",
  "type": "CHECKING",
  "verification_method": "MICRO_DEPOSIT",
  "owner_type": "BUSINESS",
  "owner": "John Doe LLC",
  "state": "ENABLED",
  "verification_state": "PENDING",
  "routing_number": "021000021",
  "last_four": "6789",
  "name": "Funding Account",
  "country": "USA",
  "currency": "USD",
  "account_token": "4998a704-636f-4d79-97da-478ea19b152a",
  "created": "2020-07-15T19:17:22Z",
  "company_id": "0924752",
  "user_defined_id": "ABC",
  "verification_attempts": 1,
  "verification_failed_reason": "", 
  "address": {
    "address1": "456 Main Street",
    "city": "New York",
    "state": "NY",
    "postal_code": "10128",
    "country": "USA"
  }
}

Patch external bank account

PATCH https://api.lithic.com/v1/external_bank_accounts/{external_bank_account_token}

Sample Request

curl https://api.lithic.com/v1/external_bank_accounts/2da0a808-de12-4b42-b413-ca736d6892c5 \
	-X PATCH \
  -H "Authorization: YOUR_API_KEY" \
  -H "Content-Type: application/json" \
	-d '
{
  "owner": "John Doe INC",
  "name": "Corporate Funds",
  "company_id": "1234567",
}
'

Sample Response

{
  "token": "2da0a808-de12-4b42-b413-ca736d6892c5",
  "type": "CHECKING",
  "verification_method": "MICRO_DEPOSIT",
  "owner_type": "BUSINESS",
  "owner": "John Doe INC",
  "state": "ENABLED",
  "verification_state": "PENDING",
  "routing_number": "021000021",
  "last_four": "6789",
  "name": "Corporate Funds",
  "country": "USA",
  "currency": "USD",
  "account_token": "4998a704-636f-4d79-97da-478ea19b152a",
  "created": "2020-07-15T19:17:22Z",
  "company_id": "1234567",
  "user_defined_id": "ABC",
  "verification_attempts": 1,
  "verification_failed_reason": "", 
  "address": {
    "address1": "456 Main Street",
    "city": "New York",
    "state": "NY",
    "postal_code": "10128",
    "country": "USA"
  }
}

Account Type Updates for Failed Verification

When an external bank account is in a FAILED_VERIFICATION state, you can update its account type using the PATCH endpoint. This allows correction of account type misclassification that may have led to verification failure. Note: In the event that an external bank account was created with the wrong routing or account number you must create a new external bank account with the correct routing and account numbers.

{
  "type": "SAVINGS" // Can be "CHECKING" or "SAVINGS"
}

Verify via micro deposit

ℹ️

If you are testing in sandbox, please enter the micro deposit amounts of 19 and 89.

POST https://api.lithic.com/v1/external_bank_accounts/{external_bank_account_token}/micro_deposits

Sample Request

To complete onboarding for an external bank account added via micro deposit verification, you will need your users to provide the two small-dollar amounts deposited into their bank account and submit these amounts to Lithic via a POST request similar to the one below:

curl https://api.lithic.com/v1/external_bank_accounts/2da0a808-de12-4b42-b413-ca736d6892c5/micro_deposits \
	-X POST \
  -H "Authorization: YOUR_API_KEY" \
  -H "Content-Type: application/json" \
	-d '
{
  "micro_deposits": ["19", "89"]
}
'

Sample Response

If the amounts posted match the amounts deposited, the verification_state of the external bank account will update to ENABLED:

{
  "token": "2da0a808-de12-4b42-b413-ca736d6892c5",
  "type": "CHECKING",
  "verification_method": "MICRO_DEPOSIT",
  "owner_type": "BUSINESS",
  "owner": "John Doe INC",
  "state": "ENABLED",
  "verification_state": "ENABLED",
  "routing_number": "021000021",
  "last_four": "6789",
  "name": "Corporate Funds",
  "country": "USA",
  "currency": "USD",
  "account_token": "4998a704-636f-4d79-97da-478ea19b152a",
  "created": "2020-07-15T19:17:22Z",
  "company_id": "1234567",
  "user_defined_id": "ABC",
  "verification_attempts": 1,
  "verification_failed_reason": "" 
}

Events API and Webhooks

You can receive notification of External Bank Account events by subscribing to the following event types in the Events API:

• external_bank_account.created: notification that an external bank account resource has been created
• external_bank_account.updated: notification that an external bank account has been updated e.g., name change