Top 6 Identity Verification Methods

Identity verification has become a crucial aspect of today’s business world, particularly for financial institutions and e-commerce companies. Unfortunately, keeping up with the latest techniques can be challenging, with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations constantly pushing the advancement of identity verification methods globally. Tack on the additional rules and regulations every country enforces, and you can see why it can become overwhelming. So how do you manage all the information surrounding identity verification? Thankfully you can summarize the methods into six primary categories.

• Knowledge-based authentication
• Two-factor authentication
• Credit bureau-based authentication
• Database methods
• Online verification
• Biometric verification

What is Digital Identity Verification/How do you Check Someone’s Expected Identity Online?

It seems like a no-brainer but identity is defined as a unique set of characteristics and traits that belong to an individual. The purpose of ID Verification is to use various tools to confirm that a person matches the expected identity.

These tools are necessary for offline processes but are imperative in online activities. From 2021 to 2022, online fraud increased by over 30 percent for businesses and consumers alike. Protecting your company from these scams starts with you taking the next step and learning how to verify the identity of consumers.

Note: ID Verification goes beyond simple identification but falls short of authentication.

Below are 6 of the most commonly used methods of verifying a customer’s identity.

#1 Knowledge-Based Authentication

Knowledge-based authentication (KBA) verifies a person’s identity by prompting the user to answer security questions tailored to be easily answerable by the person but not by anyone else. To add an extra layer of protection, KBA also requires that these questions be answered within a specific time frame.

Pro: KBA is advantageous because it’s a straightforward method of verification.

Con: Obtaining answers through social engineering tactics and social media is becoming easier.

#2 Two-Factor Authentication

Two-factor authentication requires users to provide a form of personal identification called a token, in addition to the usual username and password, when accessing an account. This token is often something the user has to memorize or possess, such as a code received from the authenticating agency, successfully deterring a large portion of fraudulent activity.

Pro: Two-factor authentication is especially useful for creating accounts and resetting passwords.

Con: This method typically requires users to have their smartphones with them during the authentication process.

#3 Credit Bureau-Based Authentication

The credit bureau-based authentication method relies on data from one or more major credit bureaus. These companies hold a vast amount of credit information on consumers, such as their name, address, and social security number.

Pro: Credit-based authentication ensures a conclusive match without disrupting the user’s experience.

Con: It may be less effective for individuals with limited credit histories, such as young people and recent immigrants.

#4 Database Methods

Database ID methods gather information from various sources to confirm a person’s identity. These sources range from social media platforms to offline databases. Commonly, this ensures that certain staff members are given access to the information they need to do their job correctly.

Pro: They minimize the need for manual reviews while gauging a user’s potential risk.

Con: These methods don’t guarantee that the person submitting the information is the same person involved in the transaction - primarily due to the abundance of false online identities.

#5 Online Verification

Online verification uses a variety of approaches to determine if a government-issued id belongs to the user. These methods include artificial intelligence, biometrics, computer vision, and human review. Users are often required to provide a photo of themselves holding the ID, which guarantees that the individual in the ID is the same as the one holding it.

Pro: Online verification is highly secure due to the number of techniques used.

Con: Some users may find the process of submitting a photo of their face and ID to be bothersome or invasive.

#6 Biometric Verification

Biometrics uses scanning and recording technology to identify and authenticate people based on physical characteristics. These techniques include facial recognition, voice recognition, iris and retina scanning, and fingerprinting.

Pro: After the initial setup, these methods offer a high level of convenience to customers as no passwords need to be remembered, no questions need to be answered, etc.

Con: Biometric data can be stolen, for example, through pictures shared on social media, unknowingly recorded voice samples, or hacked databases containing fingerprints.

What are the Benefits of Adding ID Verification to Your Process?

Here at MicroBilt, we’ve developed leading solutions that can help with online identity verification. While many id verification services are available, our ID Verify product can help you take one step beyond passwords and one-time passcodes to secure customer accounts.

With over 60 aspects of Personally Identifiable Information (PII) at your fingertips, you can be confident that you know you are doing business with the right customer.

MicroBilt ensures the highest quality verification possible by leveraging a sophisticated multi-source verification strategy against hundreds of millions of records. From proprietary high-risk address files of known fraud to government filings and agency records (i.e., Social Security Administration), our product provides verification methods beyond what many other third-party identity verification products can offer.

These crucial additional steps are more critical than ever for your business to avoid costly fines and chargebacks. It also demonstrates to your customers that their data is safe. While this may seem secondary to the previous reasons, a recent Label Insight survey relates that consumers are willing to pay more for a product that offers complete transparency and ensures safety.

Learn more about how to prevent fraud, build trust, and keep your company from paying costly fees by contacting one of our helpful experts today.