How to choose the best identity verification provider for my company? What they can offer for my business? Primarily, they provide a platform for businesses to onboard customers remotely. They can also help minimize fraudulent practices, a consequence of which is also the mitigation of risks that crop up during online transaction processing. With identity verification providers, there is also the advantage of a substantial decrease in customer onboarding costs, a parameter which falls in line with national and international anti-money laundering requirements.
Banks, financial institutions, sharing economy players, payment gateways, gamblers, and cryptocurrency exchange portals are some of the many parties which avail the services of identity verification providers.
Does My Business Need Identity Verification?
To answer this question, it is also imperative that you ask these questions:
- Does my business require protection from fraud?
- Is it necessary for my business to comply with anti-money laundering regulations?
- Is my business overspending on user onboarding (e.g., running a branch for user onboarding)?
- Does my business need to verify the legal age of customers (e.g., 18 years +)?
If your answer to any of these questions is YES – it inevitably means that you need an identity verification provider, and we recommend you to read this article further.
Which Type Of Identity Verification Should I Use?
This is the first and the most important question that crops up when trying to select the best identity verification provider. It is not easy to answer this question, as various facets must be considered. The primary issue which you need to ask yourself during this stage is – Why do I need to identify verification?
In case your company must comply with anti-money laundering regulations, you must follow the identity verification guidelines set out by the appropriate government with whom you have registered. If you are trying to secure your company against frauds, or it is imperative for you to check customers’ ages, you have more flexibility in terms of choices.
What types of Verification Methods Are Available?
There are many identity verification methods available in the market, but we will try to examine the common ones:
1. Automated System – In this method, the identification process is performed by a machine that is equipped with computer vision and machine learning algorithms. Unfortunately, in the current market scenario, machine learning algorithms have not evolved to the optimum level to help catch smart fraudsters. If your business model is not prone to fraud, you are good to go with the automated identity verification system. It comes with its own set of pros, including fantastic user onboarding speed, excellent user experience, and it is a cost-efficiency measure (find this solution in our Basic Package).
2. Human-Operated Video Chat – In certain countries (e.g., Germany), their Anti-Money Laundering regulations necessitate that humans conduct the identity verification process via video chat. Such verifications are time-consuming as humans are required to ask the verification questions. There are other problems associated with this method of identity verification as users are required to sometimes wait in queues, may experience a lag in the video, and it also poses the issue of a language barrier. Though it is a costly method with the abysmal user experience, it provides unparalleled security throughout the process.
3. Automated System With Human Supervision – In this method, the entire verification process is performed by the computerized system barring the essential part – the user identity – which is only confirmed after a human review. This method is secure, fast, and is more cost-efficiency in comparison to “Human-operated video chat.” Currently, this type of verification is the most popular method in the market. If you are not forced by the regulations to use “Human-operated video chat”, and your business is sensitive to fraud, it is highly recommended to use this type of identity verification (we offer this solution in our Startup Package and Business Package).
Importance Of Knowing The Markets From Which You Will Onboard Customers
The next important step involves identifying and understanding the demand for operations! For instance, if your entire business is based online, there are high chances that you would need a provider with a global reach. You must carefully examine if the identity verification provider supports the ID documents of the countries in which you are planning to operate. Every provider should share with you a list of countries and the supporting documents, and if that list is not displayed on their website, contact them, and request them to share the same.
The data collected during identity verification (identity document, biometrics data) is sensitive information and can be categorized as personal data. Losing this type of data can seriously damage your brand’s name and value. As per GDPR, CCPA, and other data processing regulations requirements, you are a data controller and are hence responsible for ensuring that the data is processed securely by the supplier (identity verification service). It is complicated to monitor and control the activities of other businesses. Certifications like ISO 27001 are a testament to safe information management. It is important to check if the identity verification provider has an information security management system certification (e.g., ISO 27001:2013). Seek the supply certification number from a provider and verify its validity with the accredited institution.
Do You Need Liveness Detection?
If you require verification instantly (automated identity verification) and your business is sensitive to fraud, liveness detection is an essential part. Unfortunately, liveness detection is a complicated tool for most customers, and its usage also negatively impacts the verification success rate. If your business is not fraud sensitive and does not require instant verification, liveness detection is not recommended.
Document Recognition And Data Extraction
It is essential to check with the identity verification provider if they only use the ID documents’ machine-readable zone (MRZ) to extract data or if they also utilize the front part of the documents. Many providers extract information from the machine-readable zone only, as it is incredibly cost-efficiency, it is an insecure method. If the front part of the document is not thoroughly checked, there is a risk of it being interpreted as non-compliance with regulatory requirements. Also, there is a higher risk of overlooking fraudulent verifications.
Having talked about the operations and processes, let us delve deeper into the more important aspect of pricing. One commonly used pricing model is pay per verification. Regardless of the verification process being successful or not, each verification requires you to pay. Here in iDenfy, we have come up with a unique pricing model – pay per successful verification. In other words, you will only be charged for each successful onboarding of a customer in your system.
Which of these models fits the criteria and requirements of your business?
The Next Steps
There are many great identity verification providers in the market. Still, it is not a one-glove-fits-all kind of a scenario, and the solution must be decided on a case-by-case basis. If you are unsure about which verification provider suits your business needs and your local regulator requirements, contact us.
Here in iDenfy, we have explored and examined the identity verification market diligently, and our team consists of people with 10 years + experience in this industry. Our legal, compliance, and technical teams will provide you with accurate advice regarding the anti-money laundering regulations you must comply with and the provider who would meet your needs.
Thank You for reading,