Account validation involves asking the Destination Bank whether the account in question is active and able to receive funds, or inactive. Inactive accounts may have been closed by the customer, dormant (ie not used for a number of years) or frozen by the bank due to suspicious activity on the account.
This step is optional, as not all IPSs or IPS members will be able to validate account status in advance. If an account is inactive but account validation is not available, the Source Bank will still be able to send the payment instruction, but the payment will fail when the Destination IPS tries to credit the Destination Bank. This will also require a reversal of the first part of the payment within the Source IPS. (See Annex: Unhappy Flows.)