The E-commerce industry has exploded in recent years because of COVID-19. Online sales increased significantly as people stayed at home. As per a study, one in five retail sales now takes place online. Where some businesses were forced to temporarily close, others found new ways to remain open online. However, retailers were not the only ones who moved quickly; fraudsters were also. They took advantage of the vulnerabilities created by this quick change and uncertain period. Fraudsters stole more than $700 billion in the last two years. They are expected to exceed $721 billion in 2023 due to identity theft alone. In 2020, more than 400,000 people reported that fraudulent documents had been submitted in their names. A proper and strong Identity verification system is required to stop these crimes.
Identity Verification – A Brief Overview
Identity verification is the process of ensuring that a person is one who they claim to be. This procedure frequently uses personal information like a phone number or address to confirm a customer’s identity. The identities of customers are also confirmed by utilizing contextual data like device information and IP addresses. For example, requiring additional ID checks when a customer’s account is accessed from a new location or device.
Customers are frequently asked to provide identification. This could involve entering a special security code that was sent to a verified mobile device or email address. Validation of identity is required when making a large purchase, opening an account, or trying to cross a country’s border. Identity verification is not only necessary to fight financial and cyber attacks, but it is also important for the protection of minors. Due to a lack of identity checks on online platforms, kids are attracted to online gambling, adult content, and age-restricted things. This could harm their physical and mental health. Applying proper identity checks on online platforms can stop kids from any type of harm and fraud over the internet.
The Evolving Role of Identity Authentication
Specific traits that distinguish people from one another, such as names, date of birth, height, eye color, etc., are referred to as identity. Government-issued identification documents, such as driver’s licenses, social security cards, or passports, are also regarded as elements of a person’s ID. The identity authentication process has traditionally been done in person. A person brings their documents to the government offices for verification.
The majority of staff members verify people’s identities manually, which has a high chance of error. Nowadays, most transactions are completed online, so it’s important to verify them to avoid financial fraud. Digital interactions have significantly increased, driven by pandemic pressures and the excessive usage of mobile phones. According to a survey, more than 75% of people in the United States use digital banking services today. This is extremely surprising considering that, in 2010, less than 10% of people worldwide used digital banking. This has led to a rapidly evolving identity landscape.
Importance of Identity Verification
The time is long gone when opening an account at a bank, healthcare provider, or retailer necessitated traveling to a physical location. With the introduction of new identity verification services, this hectic task has been moved online. Verifying identities online is necessary for secure customer onboarding. Traditional online identity verification methods like KBA (knowledge-based authentication) are incapable of preventing fraudsters from committing financial crimes. Despite the fact that KBA has become an outdated method of ID verification, many organizations are still using it.
Benefits of Identity Verification
Regardless of the business sector, identity verification offers a number of significant benefits that improve security and reduce overall risk. According to Shufti Pro News, the FATF removed the name of Malta from the grey list. The following are some more significant advantages of online identity verification:
- Reduced possibility of identity theft, money laundering, corruption, and terrorist funding
- Adherence to international laws and policies.
- Increased trust between users and service providers
- Provide proper risk management and assessment.
- Customer onboarding is faster and more efficient, with no paperwork or lengthy processes.
Most businesses have moved to online platforms after the COVID-19 pandemic. This abrupt online shift in many industries has made fraudsters more active than ever. Customers are scared of data breaches, identity theft, and financial fraud. Businesses must implement a proper identity verification process to eliminate these concerns and avoid heavy fines. A robust ID verification procedure provides customers with a user-friendly, quick, safe, secure, and straightforward validation process. Moreover, this process also fully complies with KYC/AML procedures and gives complete identity theft protection. It allows users to keep track of each check performed by any official authority. Many service providers are raising funds for the development of identity verification processes like Shufti Pro Funding.