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    Online Identity Verification Services for Digital Wallets


    In old times there
    was a barter system where goods are exchanged. For instance, if someone wants
    to buy a knife, he has to give some other thing to the shopkeeper. This system
    didn’t sustain and paper-based cash replaced it. Paper-based money uses the medium
    of exchanging goods. People gave an equal amount of paper money instead of
    goods. This system also has some limitations like carrying huge cash for heavy
    payments.

    Digital Wallets for
    Payments

    Digital wallets or
    e-wallets were introduced where people can store and transfer money through
    software. Digital wallets software are not limited to a single platform, they
    can be used through mobile phones, computers, or other electronic devices.
    Through e-wallets, users can transfer payments without cheques or cards. More
    and more organizations are opting for e-wallets because of their easy checkout
    process. It is predicted that by 2022 only 17% of worldwide payments will be
    conducted through cash.

    Mobile phones are mostly used for e-wallet
    transactions because of their large number of users. Mobile phone applications
    serve as a channel for payments. Statista reports that 58 percent of e-commerce
    transactions are carried through digital wallets in the Asia Pacific.

    The service that
    attracted most people towards digital wallets is transaction history. Contrary
    to that, cash transactions do not have any transaction history, plus it also
    does not have any security measures like
    identity
    verification
    service. The person who holds the cash is
    said to be the owner, there is no check that the money is stolen or illegal.
    While digital wallets perform identity verification service or Know You’re the customer before customer onboarding or completing transactions.

     

    Identity
    Verification in e-Wallets

    Initially,
    e-wallets were secured by password-based authentication. The user has to
    provide his username and passwords for login and a pin for funds transfer. Upon
    successful matching with the stored information, the user is allowed to log and
    complete the transaction respectively. Passwords or pins are not secure because
    they can be accessed by social engineering tactics. If somehow accessed users
    can lose their accounts and money also. E-wallets need a solid security protocol
    to protect user’s money.

    Here are some
    identity verification services to protect e-wallets:

    Know Your Customer
    (KYC)

    I know your customer the customer is verified through his
    government-issued identity documents. KYC is a wider process that includes
    document verification, address verification, and age verification.
    Organizations choose the plan according to their need.

    The process of KYC
    is concisely explained below:

           
    Customer onboards on e-wallet website or
    mobile app

           
    Give his personal credentials (name, dob,
    and address)

           
    Uploads the image of himself holding an
    identity document

           
    KYC software completes the document
    authenticity check

           
    User’s given data is verified with the
    information on the document

           
    The image on the document and face of the
    user is cross-matched

     

    Upon successful
    verification, the user is allowed on the e-wallet platform. KYC software uses
    OCR technology for information extraction from documents. Most businesses also
    require address verification of the user. The address of a user is verified
    through his updated address documents like utility bills, employee letters,
    bank statements. These documents are accepted for proof of address if they are
    issued within three months.

    Customer Identity
    Verification through Video KYC

    This process is
    also known as video verification. The KYC verification which was done through
    software is carried through a video call in the video identity verification.
    This process is more frictionless and speedy than the usual identity
    verification. It has very few drop-off rates and a higher customer verification
    level.

    There are modes of
    video verification:

        
    AI-based Software Verification

    The process of identity verification is done by using online software.
    It verifies the customer’s identity, documents, and address in real-time.

        
    KYC Expert Verification

    This mode incubates an expert who performs all the verification checks
    by himself.

    The process of
    video identity verification is explained below:

           
    The user connects on a video call

           
    Presents his documents

           
    Liveness detection is done against deep
    fakes, 3D masks, and pre-recorded videos

           
    Software/Expert chats with the user or asks
    some questions

    Concluding the Above

    Not only e-wallets but all financial institutions
    need identity verification services for secure customer onboarding. This will
    enhance customer trust in online payments, accelerating the trend towards
    digital wallets. Also, all financial institutions can comply with the
    regulatory authorities’ KYC and AML directives. The extended id verification
    services are robust and quick, verifying a customer in seconds. The identity
    verification services are user-friendly and low-cost as compared to
    traditional/manual verification methods.

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