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.