What is penny testing?

Introduction and importance

This low-risk, low-cost method is essential for financial operations. By confirming the nominal transfer arrives successfully, companies validate that all account numbers and routing codes (like SWIFT or IBANs) are accurate.

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Penny testing is crucial because it:

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• Identifies errors pre-emptively that could cause payment failures or misrouted funds.
• Reduces operational risk and strengthens internal controls around payment execution.
• Ensures system alignment between the ERP, treasury management system, and banking partners.

How penny testing works and when it's used

The process involves initiating a single small-value transfer to the target account. If the payment arrives, the account is confirmed and marked as approved for operational use. If it fails, the sender reviews and corrects the banking details before attempting another transaction.

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Penny testing is incorporated into standard procedures for several scenarios:

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• New account setup: Before transacting with a newly created bank account.
• Vendor onboarding: To confirm supplier banking details before the first invoice payment.
• System integrations: When connecting any payment platform (ERP, TMS) to new bank APIs or channels.
• International payments: To validate cross-border routing details like IBANs or SWIFT codes.

Penny testing and treasury automation

In modern treasury setups, this process is automated. Platforms automatically initiate the small-value test when new credentials are added and then verify the successful arrival before allowing operational payments.

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This automation removes manual steps, eliminates uncertainty during integration, and provides a verifiable audit trail, ensuring every account connection is validated before use. As treasury moves toward real-time connectivity, penny testing remains a simple, reliable safeguard against payment errors.

How Atlar helps with penny testing

Atlar enables finance and treasury teams to establish secure bank connections. As a prerequisite for making payments from a new account via Atlar, our team helps customers execute penny tests during the onboarding process to verify account details and ensure proper payment routes are configured.

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Once live, Atlar minimizes payment risk by enforcing automated validation of account identifiers and providing automated reconciliation that matches platform-initiated payments to bank transactions.

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See how Atlar simplifies payment verification, book a demo with our team.