As the world continues to adopt more and more technology in business, banking and retail, customer interactions are increasingly taking place online. This means that it’s more crucial than ever for businesses across various industries to verify their customers’ identities, particularly where payments are taking place. 

Whether it’s for security reasons, compliance requirements, or simply ensuring trust, confirming someone’s identity is a vital step in the customer onboarding process. It’s therefore important to ensure that you fully understand the obligations of your business, as well as how to verify a customer’s identity online. 

In this article, we’ll delve into the different options available to businesses to verify someone’s identity, with a specific focus on digital verification. 

What is identity verification? 

First of all, let’s look at what identity is. Identity is a combination of attributes or characteristics that belong to a person. This includes details such as a person’s name, date of birth, biometric information or a photograph of them, as well as personal security information that they have provided themselves, such as a PIN or answer to a security question. A single attribute isn’t usually enough to distinguish one person from another, but a combination of them could be. 

Identity verification involves checking multiple attributes to ensure that they match up to known data, or to prove that a person is who they claim to be. For example, when starting a new job, a business may ask an employee to provide a piece of photographic ID such as a passport or driving licence, along with evidence of their home address, such as a utility bill. 

Businesses can verify a person’s identity in numerous ways, including in person, online, or over the phone. The more attributes are checked, the more confident you can be about a person’s identity. 

Why is it important to verify someone’s identity? 

When it comes to taking payments, it’s important for businesses to verify the identity of the person making the payment for a variety of reasons. Let’s explore these below. 

Preventing fraud 

Verifying someone’s identity helps to prevent fraudulent activities, such as money laundering, using stolen credit card information, or conducting unauthorised transactions. By checking a person’s identity, you not only protect members of the public from fraud, but also reduce the risk of your business losing money through fraudulent activities. 

Complying with regulations 

Certain industries require businesses in the UK to verify the identity of their customers to comply with anti-money laundering (AML) regulations. For businesses in the financial sector, as well as certain other industries, it’s a legal requirement to register with an anti-money laundering scheme, and to follow know your customer (KYC) guidelines. 

Protecting against identity theft 

Verifying identity helps to protect individuals from having their personal information stolen and used by someone else. While a person may have access to a single piece of identifying data, this might not be enough for them to carry out fraudulent transactions. Failure to adequately verify their identity could lead to your business exposing more information that a criminal can use for financial gain. 

Building trust 

By implementing robust identity verification procedures, businesses can build trust with their customers and partners, as it demonstrates a commitment to security and protecting sensitive information. With cases of identity theft on the rise, it’s more important than ever to show customers that you’re taking the safety of their personal information seriously. 

What businesses need to verify someone’s identity? 

Guidance from the UK Government on proving and verifying identity states that you should check someone’s identity if any services you or your organisation has will show a user personal information about themselves, such as their driving licence or passport details, or give the user something. 

Some of the most common reasons that people commit identity fraud are to: 

• Access services or benefits they’re not entitled to 
• Steal personal, medical or financial information from other identities 
• Enable organised crime 
• Avoid being detected by the police and other authorities 

If your business could reasonably be targeted for any of these purposes, you need to make sure you’re complying with identity verification regulations. While those in the financial sector are particularly susceptible to identity theft and fraudulent activities, other businesses are also at risk, including healthcare providers, e-commerce platforms, and online marketplaces. 

How to verify someone’s identity 

There are various different methods available for verifying someone’s identity, including submitting and checking both physical and digital evidence. Physical evidence may include government-issued IDs, passports or utility bills, while digital evidence could consist of digital signatures, biometric data or social media profiles. 

While many businesses and the associated know your customer (KYC) recommendations favour checking the original documents themselves rather than copies, this poses the risk of the documents being lost. Similarly, in-person checks can be a reliable way to verify a person’s identity or documents, but can be time consuming and aren’t always suitable for the situation. For example, when making a purchase online, a customer isn’t able to physically bring their proof of identity to your business. 

How to check someone’s identity online 

With so many transactions taking place online, identity verification tools have become an essential component for any business accepting payments. As well as streamlining the check processes, they also support anti-money laundering (AML) compliance. 

Digital verification allows businesses to efficiently check the identity of individuals at scale, and offers security advantages that can’t be achieved through traditional methods. Digital identity verification tools use artificial intelligence (AI) to examine documents for fraud indicators, streamline checks, and reduce human error. This helps to make the process more efficient, reducing administration costs while providing an improved customer experience. 

While there are lots of options available on the market, not all tools offer the same level of security or functionality. It’s important to consider your requirements and compare providers to find the right identity verification solution for your business. 

Most solutions should offer the following features as standard: 

• Know your customer (KYC) checks  
• Know your business (KYB) checks  
• Anti-money laundering (AML) checks  
• Global regulation coverage 
• Real-time biometric ID authentication  
• Document authentication technology (OCR)  
• Customisable workflows  
• Fraud prevention tools 

Benefits of using digital identity verification tools 

There are many different identification verification software solutions available on the market to combat fraud, helping businesses to streamline the process of verifying customer IDs. Here are some of the benefits of using digital tools to verify customer identity online. 

Prevents fraud and chargebacks 

Verifying the identity of customers before processing payments helps businesses to ensure that the person making the transaction is the legitimate account holder. This mitigates the risk of unauthorised transactions and reduces the likelihood of chargebacks, which can be costly and time consuming for businesses. 

Saves time and money 

By using a digital solution rather than manual checks, businesses can streamline their verification processes and reduce the risk of human error. In particular, AI-powered tools help to provide thorough checks in just a few seconds, while the same level of accuracy would take significantly longer for a human to undertake. 

Ensures compliance with regulations 

Using specialised identity verification software helps businesses to comply with legal regulations such as AML and KYC by providing built-in compliance checks. This reduces the likelihood of facing legal or financial consequences caused by failure to do their due diligence. 

Offers additional built-in checks 

Using a digital platform allows your business to make a number of different checks that would be too time consuming to carry out manually. For example, some solutions like Access PaySuite also offer a Banking Affordability check, Right to Work check, and Right to Rent check. This not only improves the accuracy of your verification checks, but also provides additional information to inform your business practices. 

Improves customer experiences 

These more efficient digital checks not only save time for customers during the onboarding process, but also minimise administrative tasks on their side. This makes verification smoother and less time consuming for them, and avoids the need to send important original documents in the post or attend checks in person. 

Get started with customer identification verification 

Now you know how to check someone’s identity online, you’re ready to implement a robust identity verification tool to minimise the risk of identity theft and fraud. Access PaySuite’s comprehensive identification and verification solutions cater to the unique needs of businesses of all sizes while supporting regulatory compliance. 

Get in touch with us to learn more about how Paysuite can help your business maximise revenue through effective identification and verification processes.