The rapid digitization of businesses and consumer interactions has led to an exponential increase in online transactions.
However, with this shift comes significant challenges in verifying the identities of remote customers and ensuring legitimate transactions – making identity verification solutions a must-have for organizations.
The Rising Importance of Identity Verification in Online Transactions
The global identity verification market is projected to reach $18.12 billion by 2027, growing at a CAGR of 13.1% from 2020 to 2027. This impressive growth is fueled by the rise in fraudulent activities and identity theft during remote transactions.
Without proper identity verification, businesses stand to lose billions each year to such cybercrimes.
The Challenges of Online Transactions Without Identity Verification
One particularly concerning trend is the rapid growth in synthetic ID fraud in the US – the fastest-growing type of financial crime in the country. Synthetic ID fraud accounts for 10-15% of charge-offs in a typical unsecured lending portfolio. Fraudsters use these fictitious identities built using stolen PII to easily secure credit, making it challenging for businesses to detect.
Losses from synthetic ID fraud are estimated to have reached $6 billion in 2016 alone – and the lack of robust identity verification is exacerbating this challenge. In response to the pressing need for identity verification solutions, we are witnessing a rise in identity verification companies.
Through the use of advanced technologies and meticulous processes, these companies guarantee secure and seamless user authentication.
For example, one such company, Authenteq, offers a secure, privacy-friendly identity verification service that combines facial recognition, document verification, and a liveness test to verify someone’s identity in a few seconds.
Understanding the Identity Verification Process
To enable trustworthy online transactions, businesses need to have a streamlined identity verification process. Here’s what this process typically entails:
- Collecting personal information – The customer provides information like their name, date of birth, address, phone number, and email ID.
Additional information like previous addresses, marital status, education details, and employment history may also be collected depending on the business requirements.
- Validating government-issued IDs – The customer submits images of government-issued IDs like a driver’s license, passport, or SSN for validation.
The details are then validated against government databases to authenticate the ID and match it to the person’s details.
- Using biometric data – The customer’s facial biometrics, fingerprints, or other data is collected and verified. In addition to government IDs, businesses are increasingly using biometric data for identity verification including:
Facial recognition – Customer’s photo is matched against their government ID photos.
Fingerprint verification – Fingerprint scan is validated against government fingerprint records.
Voice recognition – Customer’s voice sample is matched to verify identity.
Iris scanning – Iris patterns are checked against biometric databases.
Biometrics provide an additional layer of security in identity verification.
The submitted data is then matched against various official databases like DMV records, voter registration databases, national ID databases, and more. Once the customer’s claimed identity is matched and authenticated, they are verified.
This helps businesses confirm the legitimacy of customers in customer-not-present scenarios, while also building consumer trust and loyalty.
Matching Data Against Databases
The collected personal information, government IDs, and biometrics are then matched against both government and commercial databases including:
– DMV driving license records
– Voter registration databases
– National ID databases
– Immigration records
– Utility records
– Mobile carrier records
– Banking/credit records
Once the customer’s claimed identity is authenticated and matched across these sources, their identity can be reliably verified.
This expanded section goes into more detail on the different steps in the identity verification process – collecting personal information, validating government IDs, using biometrics, and checking data against databases. Please let me know if you would like me to expand any other sections or modify this section further.
Choosing the Right Identity Verification Solution
Accurately verifying the age of customers in digital interactions helps these businesses remain compliant with regulations around age-restricted products and services.”
With identity verification now indispensable for online businesses, choosing the right verification solution is crucial. Here are some key factors to evaluate:
- Data quality and variety – The solution must access high-quality identity data from diverse sources to enable accurate matching.
- Use of official databases – It must allow cross-checking across official databases like government ID databases for authentication.
- Data matching capabilities – Advanced matching algorithms to pair customer data with databases are important.
- ID authentication – The ability to authenticate government-issued IDs and detect tampering is essential.
- Biometric authentication- Solutions with AI-powered biometric checks provide superior security.
- Regulatory compliance – Solutions must enable compliance with KYC and AML regulations in your jurisdictions.
Ensuring Quality Data for Identity Verification
The reliability of the identity verification process depends heavily on the quality of the data sources used. Verification providers must partner with the most legitimate sources and perform regular data cleansing. A high match rate evaluates the quality of data and top providers aim for match rates of over 99% to minimize rejections of legitimate customers.
Types of high-quality data sources include:
- Government databases – DMV (Department of Motor Vehicles) records, voter registration data, immigration records, etc.
- Telco and utility records – Account information from phone and utility companies.
- Financial records – Credit bureau data, bank account/credit card details.
- Business records – Employer databases, commercial address records.
The Need for Multiple Data Sources
Relying on a single data source can compromise identity verification, especially for customers with limited digital footprints. Hence, the best providers cross-check multiple databases to authenticate identities.
Each data source offers unique insights – for instance, utility records provide address history, while government IDs validate biographic information. Comparing inputs from different sources enables holistic identity verification.
Addressing Global Data Entry Variations
A key challenge is that data entry conventions differ widely across countries, languages, and document types. For instance, the date ’05-06-1990′ could be entered as June 5 or May 6 depending on the region.
Top global verification providers use intelligent data normalization techniques to address such inconsistencies and accurately match customer inputs to verified identity records.
Maintaining High Match Rates Globally
As digital interactions rise globally, organizations must partner with identity verification providers who can overcome data variations to deliver consistent, high match rates across geographies.
Low match rates can increase friction in onboarding legitimate customers, which is detrimental to CX and revenues. By working with reliable global verification partners, businesses can confidently onboard new customers and combat fraud worldwide.
Identity verification has become indispensable for modern businesses to minimize fraud, onboard legitimate customers seamlessly, and enable trust in digital transactions.
By choosing verification solutions smartly, optimizing data quality, and addressing data variations, companies can maximize match rates and security globally.
In the fast-evolving digital landscape, robust identity verification is now a competitive necessity to build business resilience.
Daniel Martin has hands-on experience in digital marketing since 2007. He has been building teams and coaching others to foster innovation and solve real-time problems. Dan also enjoys photography and traveling.