Chris Hooper

The financial industry is evolving rapidly, with technology reshaping how we make payments, borrow, invest, and bank. From mobile wallets to cryptocurrencies and robo-advisors, these innovations are transforming traditional financial services in both developed and emerging markets.

Seizing the opportunity: How identity verification technology is transforming the payments sector

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How Identity Verification Technology Is Transforming The Payments Sector | Veriff.com

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How Identity Verification technology is transforming the digital payments sector

Identity Verification

Identity verification

If you run an online business, then you need to make sure that your customers are exactly who they’re claiming to be. This way, you can eliminate fraud and ensure regulatory compliance. 

Here, we’ll explain how to verify user identity. We’ll also outline popular verification methods and explain why verifying the identity of your users is so important. But let’s first start with the basics and provide a definition of user identity verification.

User identity verification refers to the process of making sure every customer is exactly who they are supposed to be. By asking a user for documentation and verifying the information they provide, your business can answer two key questions:

Is the person attempting to access information or make a transaction the person they’re claiming to be?

For this reason, user identity verification is useful for both new customers and reverifying existing customers who are attempting to access their accounts. 

Overall, the user identity verification process ensures that fraudsters and bad actors cannot exploit a service. It also prevents anyone from carrying out a transaction on someone else’s behalf.

For some companies, identity verification processes are simply good to have. However, for businesses like financial services providers, they’re a mandatory part of anti-money laundering (AML) and know your customer (KYC) processes.

What types of verification are available?

The user identity verification process can take many different forms, depending on the channel and the information a customer is attempting to access. That said, the most popular identity verification methods are:

Biometric authentication methods verify an individual based on their unique biological characteristics.

Biometric identification systems store authentic data and then compare this information with a user’s physical traits. They’re very useful both for onboarding new customers and reverifying returning customers. Different forms of biometric verification methods include:

Our biometric authentication solution verifies a user by analyzing the shape of their face, and using important measurements such as the distance between their eyes. By asking the user for a selfie, the software can verify that a returning customer is exactly who they’re claiming to be.

Fingerprint scanners are the most popular form of biometric authentication. This is because fingerprints are easy to capture and analyze.

Fingerprint scanners work by identifying loop patterns. Once patterns have been identified, the scanners then find a match between a customer’s fingerprint and another fingerprint in their database.

Everyone’s voice is unique. This is because factors like movement variation and accent are unique to each individual and no two voices are the same. For this reason, pieces of voice recognition software can verify a person’s identity by listening to their speech. 

Due to the fact that only a customer’s speech is required to prove their identity, this process is ideal when verification needs to be completed over the phone.

Eye scanners use visible and near-infrared light to check a person’s iris for unique characteristics. Often considered in the same category as facial recognition, eye scanners are highly accurate and can verify a user’s identity in only a couple of seconds.

With knowledge-based authentication, a person’s identity can be verified if they correctly answer a unique security question.

Although these questions are simple in nature, they’re designed to be difficult for anyone other than the individual in question to answer. Popular questions include things like ‘what was the name of your first pet?’ or ‘who was your favorite teacher at school?’

Although knowledge-based authentication has its benefits (users like its ease and convenience), it’s becoming increasingly easy for hackers to find out the information required to access an account through social media and social engineering.

Online verification methods (like our id verification software) determine whether a government-issued ID is legitimate and whether it belongs to the person who is trying to access a service. All the customer needs to do is snap a selfie and provide a photo of their ID.

Online verification is very secure and can be completed in seconds.  

3rd party verification (TPV) involves a business using a third party to review and confirm a customer’s information and intentions. It’s also commonly used in situations where a customer wants to provide or update information but cannot readily deliver a contract or a physical copy of that information.

2-factor authentication adds an extra layer of protection to the sign-in process. Once a customer has entered their username and password, they’re then asked to provide a separate piece of information, such as a PIN or a piece of biometric information.

A great example of the 2-factor verification process is how customers gain access to their bank accounts. As well as a username and password, some banks will ask for a customer’s fingerprint when they’re using a banking app. Others will provide the user with a small box that will produce a unique numeric code each time they want to access their internet banking account.

In summary, finding the right identity verification solution for your needs can be tricky. Different solutions will provide you with different positives and drawbacks. Overall, the right solution for you will likely depend on the sensitivity of the information your customer is attempting to access and how they’re trying to access that information. If you’re still unsure which method is best for your requirements, watch our webinar on the subject.

How does user identification affect user experience?

Many businesses are concerned that robust identity verification procedures will damage customer relations. Similarly, we understand that some users have concerns about supplying businesses with their personal data. 

Remember though, most of your customers have already incorporated several security measures into their everyday lives. They show their passports at the airport and input their PIN when they make a large purchase.

By using experts (like us) to manage your identity verification process, you can ensure that the process is not invasive at all. In fact, when managed correctly, the identity verification process should actually facilitate customer conversions, rather than inhibit them. This is because the process can build trust and display security.

Finally, to make the customer experience as simple as possible, we’ve ensured that our identity verification platform is fully customizable. This means that you can modify the color schemes in our end-user flows to align with your branding, as well as add your logo. Full white labeling is also available if you’d like to make the process as seamless as possible.

The process of identifying users might sound scary or complicated in the first instance. However, in reality, the actual process is simple and straightforward.

In a face-to-face setting, a customer can produce a document that shows exactly who they are. This document will contain vital information, such as the customer’s name, age, address, or nationality.

However, the majority of us now complete our transactions online. As a result, website owners have found simple ways to verify identity. In fact, these forms of identity verification can actually be more convenient for customers. This is because these methods don’t involve a person standing and waiting in line, or booking an appointment to see someone.

So, how do we help a customer verify their identity? Well, it’s a simple two-step process.

We ask a customer to take a photo of a government-issued identity document, such as a UK driver’s license, a US passport, or a Dutch identity card (this is done via either a webcam or a smartphone, so the entire process is live)

We then ask the user to submit a selfie using the same device

To make the process as simple as possible, we even offer advice to customers while they’re taking their selfies. This means that the vast majority get it right on the first try. Customers also receive a decision in only six seconds.

What are the risks of not verifying user identity?

The process of verifying user identity is vital for both businesses and customers alike. As we mentioned earlier, this is because the process can build trust. In 2021 alone, nearly 42 million Americans were victims of identity fraud. This level of fraud cost consumers $52 billion in total losses.

By verifying the identity of your customers before you allow them to make a transaction or access your service, you can prevent identity fraud and help your customers keep their information safe.

On top of this, in certain industries (such as financial services), verifying the identity of your customers is a legal requirement under the Bank Secrecy Act. This means that, if you don’t verify the identity of your customers, then you may face huge regulatory sanctions, fines, and reputational damage.

Speak with the identity verification experts at Veriff

If you’re interested in learning more about how to verify user identity, then speak to our identity verification experts today. We’d love to explain exactly how our products and services can help meet your needs.

By verifying the identity of customers before they can make a transaction or access a service, businesses can prevent identity fraud, help customers keep their information safe, and meet global compliance.

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How to verify user identity? Article about popular verification methods, why verifying user identity is important, and the role of verifying user identity.

How To Verify User Identity | Veriff.com

A blog about user identity, including popular verification methods, why verifying user identity is important, and the role of verifying user identity in relation to global compliance.

How to verify user identity

An identity is made up of a combination of characteristics. One characteristic isn’t normally enough to categorically and securely identify someone, but a combination usually is. 

In its simplest terms, someone’s identity needs to be verified if they are using a service that requires personal information or if it is giving them something valuable. By effectively verifying someone’s identity, companies can be confident that they are providing the right people with the correct access to their services. The vast majority of identity verification is now conducted online and there is now no getting away from it; digital identity verification is necessary and is here to stay. 

Many people are concerned that robust identity verification procedures will be complicated and will damage customer relations. In turn, users can be apprehensive about having to prove who they are by supplying personal data.  

However, if managed correctly by a company like Veriff, identity verification should be a simple process that shouldn’t be invasive at all and should facilitate customer conversions rather than inhibiting them.

Many years ago, the only method of identifying another person was by using your memory to remember their various facial features and physical details. This obviously does leave room for error and therefore different methods have slowly emerged: 

Jewelry: The oldest pieces of jewelry that were used for identity purposes are beads that date back 100,000 years. Even now, jewelry in the form of ‘dog tags’ are used in the army and specific bracelets are worn by people to identify their medical needs. 

Government census: Government Censuses are simple ways to identify populations, with the earliest mention of a census taking place in 3800 BC during the Babylonian Empire. The Roman Empire took this further and introduced a variety of identity verification documents like birth certificates and citizenship records which are still in use today.

Passports: The conception of passports has long been credited to King Henry V of England who created a document in 1414 that enabled English citizens to prove their identity while in a foreign country. After WWII, photo IDs like passports became much more widespread. 

Fingerprints: A biometric breakthrough was made in 1858 by Sir William Herschel who found a way to precisely use ink fingerprints as manual signatures on documents like Wills and Deeds. 

Digital records: Believe it or not, there was a time before secure digital records were a thing! In 1977, the US was the first to computerize its paper records and simultaneously created a program that could cross-reference between different banking and governmental bodies. 

Identity smart cards: The digitization of personal records led the way for many countries to introduce smart cards that carry a variety of secure identity verification information. The first few countries to use these were Singapore, Germany and the Czech Republic. 

Biometric records: The world’s largest biometric digital ID system – The Aadhaar platform – was developed in India in 2010 and captures fingerprints and iris scans. Biometric verification went mainstream in the consumer market in 2013 when Apple implemented a fingerprint sensor on the iPhone 5S. This was made even more robust in 2017 when Apple introduced FaceID on the iPhone X. 

We are now living in a world of rapidly developing technology, and this brings with it a growing threat of identity fraud. Identity verification processes need to keep evolving in order to remain as secure as possible, while being simple to use and easy to understand.

Identity verification has now evolved to be mainly digital and the process involves two key questions:

Who are you? This is verified by comparing a person’s biometrics to a database of possible identities in order to match them and discover their identity.

Are you who you say you are? This is distinctly different to the first question and it is the foundation of biometrics-based security. In the case of unlocking a phone for example, when you use your fingerprint to unlock your phone, you are comparing it to the fingerprint scan you have previously submitted. 

There are many different options out there for companies looking to bolster their identity verification services. How much confidence a company has in an identity is determined by how many pieces of evidence they can collect to prove it. 

New technology is being developed all the time to help ease the process and make it as simple as possible for people to use. Earlier in 2020, Veriff launched a new product, called Assisted Image Capture that means we can support a user in real-time by monitoring their biometric photo and advising if there are any issues with it. In a nutshell, it makes the process less daunting for consumers, boosts conversion rates and removes the more cumbersome and time-consuming parts of the identity verification process.

Why identity verification isn’t a barrier

Most people are already used to standard security measures, such as entering a PIN number or providing a digital signature. Even providing fingerprints is becoming increasingly prevalent in everyday life. However, some customers are concerned that identity verification processes are becoming more invasive and they are becoming suspicious of companies that require them.  

As more of our life moves online, it is natural that high-risk transactions will require more robust systems and processes that may be perceived as invasive. However, ensuring an individual is who they say they are is a top priority for many businesses. 

Good digital identity verification should be simple and let consumers to decide when, whether and with whom they share information about themselves. When done correctly it will inspire confidence and trust as a user will realize how well a company is looking after their data.  

Transparency into why the process is being carried out in a certain way is also vital so that customers know their information is needed to meet compliance and regulatory requirements. 

Identity verification processes have evolved enormously over the last few years. As long as digital processes continue to be carried out in a simple and transparent manner, there is no reason why this new wave of practices won’t soon feel as easy and natural as showing a passport at the airport. 

How easy is the process of figuring out if someone is being honest about who they are? Easier with Veriff on your side.

Education

Figuring out if someone is being honest about who they are used to be challenging. But now, with so much technology and an array of different identity documents, it should be easy. But how easy is it?

If you offer services in the digital space, user verification is essential regardless of whether you are required to do it by law. Identity verification is about more than legal compliance. It’s about making sure your customers are who they say they are and building relationships. 

Veriff’s data, gathered from millions of verifications a year, detect that as much as 5% of all attempted verifications are fraudulent, with some industries like cryptocurrency and block-tech seeing rates as high 24.6%. This and the hefty fines that come with non-compliance are just a couple of reasons why companies beyond financial sectors are looking to expert solutions for help.

When looking for a first-time provider to comply with industry regulations, what you need will differ from someone looking to switch. You likely aren’t sure about your exact needs, and do not have the experience to know what works and doesn’t work for you.

It helps to get an idea of the level of risk you are working with. Certain industries come with higher risk appetites. For example, the fintech sector is highly regulated whereas marketplaces deal with differing compliance laws. 

In addition to your compliance needs, it is also important to note the extent to which you are willing to sacrifice speed for security. More security checks and steps reduce the risks of fraud, but also add steps to your conversion funnel, and some tools are able to optimize this better than others. 

You already have a provider, but you’re not happy

Let’s say your current provider ghosted you after the sale was complete, leaving you with a stiff, inflexible solution that no longer meets your needs. To keep up with the shifting priorities and needs in a dynamic regulatory environment, you need a partner that is able and willing to adapt their product to suit your needs.

Ultimately, you need to know what is on the market. Below are the features and specs that will help you find a partner that is willing to grow with you.

There are plenty of terms and phrases in the IDV industry. Before diving into the specific features of an IDV service and explaining the benefits, it is important to understand how the degree of automation impacts IDV service speed, quality, and your conversions.

Simply put, an automated IDV service relies solely on machine learning technology to make decisions. Decisions basically mean if a person is verified as the person they claim to be or not. 

Automated decisions are much quicker when everything goes right, and do not place your customers in queues to be manually reviewed. While this sounds great, they are also easier to deceive and therefore increase the risk for fraud or non-compliance. And if something goes wrong, troubleshooting is much more time-consuming than when manual review is an inherent part of the process.

On the other end of the spectrum, fully manual services solve the problem of accuracy but tend to come with high costs. Providing this kind of service requires a large team of outsourced highly trained specialists, and this will be reflected on your bill.

It’s hard prioritizing one over the other and unnecessary as a third option exists. Veriff is an example of a service that uses both machine learning and manual reviews for challenging sessions to leverage the benefits of both. 

Now that you have a better understanding of the level of automation you’d like in the service, there are other features and factors that influence conversions. After all, it’s all about welcoming customers first, staying compliant second.

One of the best ways to improve conversion rates during verification is to give users real-time feedback while they complete each step. Veriff is one provider that offers this feature, helping clients like Mintos deliver pass rates as high as 95%.

To give this feedback, Veriff uses machine learning to detect flaws in photos such as poor lighting or unreadable ID text, then customers are automatically instructed to fix it. 

Another way to boost conversions and prepare your users for the additional steps that identity verification adds is to provide supporting material. A great example is our client Mintos, who use a number of techniques to educate their users about Veriff and maximize conversions. Having a helpful IDV partner will make this process a breeze.

Moving beyond the topic of conversions, it’s important to look into market and ID coverage. Some providers offer a more diverse range of locaĺizations than others, with Veriff leading the industry (35 languages and open to more depending on client needs). 

If you’re in the digital or online world, then the idea is to be global. Make sure that the IDV provider you choose covers all of your markets. The number of supported countries among industry-leading IDV providers varies, with some providers covering around 100 and others over 190. 

But market coverage is not the same as ID coverage. 

An IDV software provider might offer wider country coverage but support fewer identity documents. Ideally, you want to maximize the number of IDs your clients can choose from to verify themselves. That is why Veriff supports 12,000+ government-issued IDs from 230+ countries and territories.

Checking a user’s identity varies from a basic ID authenticity check to full-on biometric analysis, session tracking, and live recording the entire verification process. There is also a wide range of pricing models, integration options, and degrees of after-sale support depending on your provider.

When it comes to identity verification, a one-size-fits-all solution does not work.

Being able to select the thoroughness of an identity verification session has a huge impact on results. For every step in your customer journey you will experience drop offs, and by configuring the verification tools you use to include only the checks you need, you will be able to tick both boxes: conversions and compliance.

To give clients this level of flexibility, Veriff configures the decision-making technology behind our verification software for each client, enabling only the checks necessary to match their risk appetite. These “decision profiles” determine which data inputs to gather, what checks to conduct, what outputs to send to the client, as well as the extent to which we automate our IDV service.

Scalable pricing and free trials are a plus

Let’s say you already found several suitable providers, and all the information is ready to present to your team. The only missing piece, much to your CFO’s dismay, are the pricing details.

It’s hard to make a decision without knowing the costs and contract terms. Most IDV providers give out this information is only disclosed only after a sales call or even as late as after signing a non-disclosure agreement. Also, many IDV providers go with a minimum commitment contract that you won’t be able to get out of.  

Veriff aims for transparency as well as scalability, and you can have a look at our pricing plans here, which you can upgrade or cancel anytime. You can also try our service for 30-days free. No sales call needed, just sign up on our website and see how it works.

Integration options should cover mobile and web

Customizability in terms of integration options will make sure you are able to integrate an IDV provider with all the interfaces and platforms you use. Mobile SDKs for iOS and Android, API, and web integration options (including mobile) are standard but not guaranteed, so make sure you know what you need in advance.

While there are a lot of things to consider when looking for an IDV provider, the number one factor that will determine a positive or negative outcome is how willing your provider-to-be is to support you. 

Veriff goes beyond bug fixes and integration support. With the help of a dedicated account manager for all plans, we help you implement Veriff in a way that gives you the best possible results. Learn more about our product and pricing here. You can also get a better understanding of identity verification in our handy guide.

Finding ID verification software (IDV) suitable for your company’s needs can be challenging. With the right approach, you can easily navigate the competitive IDV marketplace and find a tool that best matches your needs. Here's how. 

How to Choose the Right Identity Verification Software

ID Verification

Raul Liive

You might be keeping it real, but not everyone is as honest. Fraud is out there, and there are plenty of cybercriminals waiting for a chance to pretend to be you.

Online fraud involves tricking victims into harmful actions, leading to lost money, personal information, or other damage. Unlike other cybercrimes, it relies on victims voluntarily taking these actions. In the U.S., cybercrime incidents, including online fraud, have risen sharply, from 467,000 in 2019 to over 880,000 in 2023. During this period, monetary losses have also surged, jumping from $3.5 billion to $12.5 billion.

Fraud is out there, and there are plenty of cybercriminals just waiting for a chance to pretend to be you. Luckily, they can be stopped, and here's how.

You might be keeping it real, but not everyone is as honest. Fraud is out there, and there are plenty of cybercriminals waiting for a chance to pretend to be you. 

Enhance customer experience and reduce abandonment rates with these 9 tips for improving digital identity verification in financial services. Learn how AI and biometrics can help.

9 Tips for Digital Identity Verification in Financial Services

A blog offering tips on everything you need to know before completing identity verification online.

Verification Tips - 9 Tips for Verification Success

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9 tips for preventing business fraud through digital identity verification in financial services

In our Identity Verification Guides, you'll explore a wealth of educational resources to empower you in identifying more customers securely and swiftly than ever before.

Explore Identity Verification Guides and ensure compliance. Join us for valuable insights and stay ahead in your industry. Learn more with Veriff.

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How Identity Verification technology is transforming the digital payments sector

How to verify user identity

How Simple is Identity Verification?

How to Choose the Right Identity Verification Software

9 tips for preventing business fraud through digital identity verification in financial services

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Identity Verification Guides

Latest Resources

How Identity Verification technology is transforming the digital payments sector

How to verify user identity

How Simple is Identity Verification?

How to Choose the Right Identity Verification Software

9 tips for preventing business fraud through digital identity verification in financial services

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