Popular in the banking and finance world, penny tests are a simple way to verify the validity of a bank account or bank integration, prior to a large finance transaction taking place.
A penny test (also called smoke testing or small value testing or penny drop testing) is a simple way to test the validity of a bank account by depositing a small amount of money—usually a penny as the name suggests—into the bank account. Penny tests can also be run as debits, withdrawing a penny from an account instead of depositing it.
By depositing or withdrawing a real, but small, amount of money it is possible to verify that the transaction route from payer to payee works as expected in advance of other, larger transactions.
A penny test can also be used to test an integration to a bank—not just to verify transactions between two bank accounts. Penny tests are also a reliable way for businesses who utilize bank integrations to ensure that those integrations have been successfully set up. For businesses using Modern Treasury, we always recommend penny testing to ensure that transactions will be able to be completed as expected, after setting up a new banking integration. Find more information on how to penny test with Modern Treasury here.
Penny tests are a good practice for all businesses, but especially for businesses that transact with a large volume or customers, vendors, or other entities.
These are the broader payment concepts that underpin payment operations.
- 1Payment Operations
- 2Banking API
- 3Flow of Funds
- 4Bank Reconciliation
- 5Continuous Accounting
- 6What is Money Transmission?
- 7What is Cash Management?
- 8What is Treasury Management?
- 9What are Incoming Payment Details?
- 10What is an Identity Verification API?
- 11Payment Processor vs. Payments Gateway
- 12What is Cash Forecasting?
- 13What is Cash Pooling?
- 14What is Liquidity Management?
- 15What is an Agent of the Payee Exemption?
- 16What Is a Treasury Management System (TMS)?
- 17What is Real-Time Gross Settlement (RTGS)?
- 18What is a Penny Test?
- 19What is Batch Processing?
- 20What are Payment Controls?
- 21What is Idempotency?
- 22Settlement (Net vs. Gross)
- 23What is Asset Risk Management?
- 24What is A2A Banking?
Subscribe to Journal updates
Discover product features and get primers on the payments industry.